(Reuters) – Shares of Rocket Cos Inc RKT.N rose 15% after their New York debut on Thursday, a day after the parent company of U.S. mortgage lender Quicken Loans slashed its IPO target size by more than $ 1 billion.

A screen displays the logos of Rocket Companies (RKT), the parent company of Rocket Mortgage and Quicken Loans, in Times Square during the company’s IPO on the New York Stock Exchange (NYSE) in New York City, New York, USA, August 6, 2020. REUTERS / Mike Segar

Rocket’s shares were trading at $ 20.84 after opening at $ 18.00 per share, the same as its IPO price.

Rocket’s relatively lukewarm IPO comes at a time when U.S. capital markets are in the midst of a stellar recovery after the COVID-19 pandemic suspended several debuts earlier this year.

The price of the IPO and the size of the deal suggest that Rocket struggled to convince investors that its mortgage platform business deserved the kind of valuation that is typically handed to the tech unicorns of Silicon Valley. .

“You’re seeing a low rate environment in conjunction with a decrease in (mortgage) applications,” said Michael Underhill, chief investment officer for Capital Innovations, which invests in IPOs.

“So investors are very cautious, very surgical and… if it’s not a rock solid business model, they’re not really interested in buying on the IPO. “

The company sold 100 million shares, up from the 150 million it had forecast for the IPO, to raise $ 1.8 billion, which values ​​the company at around $ 36 billion.

At its IPO price of $ 18, it is now the third-largest U.S. listing of 2020, excluding blank check companies. Only Royalty Pharma RPRX.O and Warner Music Group WMG.O had a larger stock market debut this year.

In its initial price range of $ 20 to $ 22, Rocket could have become the biggest US IPO of the year.

Rocket, founded by billionaire Dan Gilbert in 1985, said earlier this month that it expects more than $ 3 billion in profit in the second quarter, down from a loss last year.

Goldman Sachs, Morgan Stanley, Credit Suisse and JPMorgan were among the underwriters of the IPO.

Report by Anirban Sen in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta