Compass, Backed by SoftBank, Could Go Public This Month
Compass, the real-estate technology company backed by SoftBank, is going public.
Late Tuesday, the company made public documents it filed confidentially with the Securities and Exchange Commission in January, laying the groundwork for an initial public offering. Compass said it intends to raise $500 million. That number is considered a placeholder that is likely to change in future filings when the company is expected to disclose how many shares it plans to sell, and the range of prices investors are likely to have to pay.
The stock is expected to trade on the New York Stock Exchange under the symbol COMP. Goldman Sachs, Morgan Stanley, and Barclays are underwriters for the IPO. Companies typically have to wait 15 days after making their prospectuses public before they can start meetings with investors to explain their businesses and IPO plan. That timeline indicates Compass could begin trading later this month or in April.
Robert Reffkin, CEO of Compass, said he co-founded the company to help real- estate agents like his mother, Ruth, according to a letter appearing in the prospectus. She struggled to expand her business because she didn’t have the right tools or support, Reffkin said. Software transformed other industries, but the real-estate brokerage sector struggled to keep up, he said.
“I vowed to create a company that would do better for agents like my mom,” he wrote.
Reffkin and Ori Allon, chief strategist, launched Compass in 2012. It provides a platform, including cloud-based software for customer-relationship management and marketing, that assists more than 19,385 real estate agents in selling homes. In 2020, Compass agents helped sell about $152 billion in residential real estate.
Compass isn’t profitable, although losses narrowed to $270.2 million for 2020. This compares to $388 million in losses for 2019, the prospectus said. Revenue rose nearly 56% to $3.7 billion.
The New York company has raised $1.5 billion in funding, according to Crunchbase. This includes a $400 million round led by SoftBank in 2018. SoftBank owns nearly 35% of Compass Class A stock, while Allon has 5.2% and Reffkin has 2.4%. Reffkin has 100% of Class C common stock, the prospectus said.