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Compass taps banks for IPO

written by Bella Palmer

The company has used capital from venture investors to acquire brokerages

Compass, a SoftBank-backed company that's among the largest real estate brokerages in the US, has selected underwriters for a potential initial public offering (IPO), according to a person with knowledge of the matter.

The New York-based startup is working with Goldman Sachs Group and Morgan Stanley ahead of a listing that's slated for 2021, said the person, who requested anonymity because the information isn't public.

Representatives for Compass and Goldman declined to comment. A spokesperson for Morgan Stanley didn't have a comment.

Compass was founded in 2012 by Ori Allon and Robert Reffkin, a Goldman alum who was once Gary Cohn's chief of staff at the bank. It positions itself as a real estate firm that uses technology to give its agents an advantage over rivals. The company has used capital from venture investors to expand by acquiring smaller brokerages across the U.S.

Low mortgage rates have fuelled a housing rally in the US as Americans seek more space to spread out in the pandemic. That's boosted residential real estate companies, including Zillow Group and Opendoor, another SoftBank-backed company. Realogy Holdings, which owns Compass competitor Corcoran Group, has seen its shares rally about 28 per cent this year.

In addition to SoftBank, which participated in a £277.04 million (US$370 million) funding round last year that valued Compass at £4.79 billion (US$6.4 billion), investors include Goldman Sachs, Fidelity, Wellington Management, Founders Fund, Dragoneer Investment Group and Canada Pension Plan Investment Board, according to its website.

Former American Express chief executive officer (CEO) Ken Chenault and CEO Marc Benioff are also investors.


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