Rithm Capital delays Newrez public listing, eyes M&A opportunities

Rithm Capital, the parent of multichannel mortgage lender Newrez, said it’s not currently moving forward with plans on an initial public offering for the subsidiary as it focuses on supporting the firm’s broader portfolio. Instead, the firm is turning its attention to mergers and acquisitions, even amid macroeconomic uncertainty.

“First of all, we spent a lot of time looking at how we’re going to get our stock price to be what we think it should be. Right now, when you look at the company and the growth of the company, we’re likely not going to list it separately today. We’re going to continue to grow the business,” Michael Nierenberg, Rithm’s president and CEO, told analysts during an earnings call on Monday.

According to him, Rocket Companies’ deal to acquire Mr. Cooper Group valued that firm at twice its book value, implying a valuation of $8.3 billion for Newrez and a $22.60 price for Rithm shares, including an increased valuation to its other businesses.

Rithm Capital’s stock was trading at $12.35 as of 10 a.m. ET on Monday, up 1.31%. 

Newrez posted a 19% pretax return on its $5.8 billion in equity in the second quarter 2025. Net income reached $275.1 million, up slightly from $270 million in Q1 2025.

Funded loan volume totaled $16.3 billion, compared to $14.6 billion in the same period last year and $11.8 billion in Q1 2025. The company remains heavily reliant on the correspondent channel and saw its gain-on-sale margin fall to 1.22% in Q2 2025.

Chasing profitability

Newrez President Baron Silverstein said that while market competition continues to compress margins, the company remains focused on “profitable growth.”

“We also expect future growth without having to chase volume through price,” he said, citing the launch of the Newrez Direct platform, which targets purchase recapture, along with a digital Realtor partnership to better support consumers during their homebuying journey.

Newrez’s recapture strategy is now led by chief commercial officer Leslie Gillin, who formerly served as chief marketing officer for JPMorgan Chase.

“While a reduction in rates would benefit overall origination volumes, our momentum in connecting with consumers through purchase transactions and home equity products is key to sustaining growth in any market,” Silverstein said.

Newrez has gained market share in non-QM originations and expects similar growth in its home equity and prime jumbo segments. Non-agency production rose 42% quarter over quarter to $1 billion. Executives said that releasing Fannie Mae and Freddie Mac from conservatorship would present a “significant opportunity” for these products.

The company’s servicing portfolio grew to $864 billion in unpaid principal balance (UPB), up from $810 billion a year ago. That includes $271 billion in third-party servicing — up 6.7% quarter over quarter and driven by the addition of 10 new clients. In total, $61 billion in new UPB was transferred in the first half of the year.

Newrez claims a 98% client retention rate in servicing. It continues to see opportunities to grow organically or through portfolio acquisitions. Its cost to service a loan is approximately $142.

M&A opportunities

Overall, Rithm reported Q2 2025 net income of $318 million, up from $80.7 million in Q1. GAAP net income came in at $284 million, according to filings with the Securities and Exchange Commission (SEC). 

“On the M&A front, our pipelines are robust. We are working on scaling up our credit business, our origination business lines and other opportunistic situations, where we can create value for both shareholders and LPs (limited partners),” Nierenberg said.

The company sees additional growth opportunities in direct lending, insurance, private equity and infrastructure. It ended the quarter with a record $2.1 billion in cash and liquidity.

Despite concerns over geopolitical risks, Nierenberg noted that many companies are expecting stronger earnings moving forward. He described the current economy as “feeling pretty good” and projected one to two rate cuts from the Federal Reserve this year.

Nierenberg said the Trump administration is comprised of “deal guys” who will continue to negotiate tariff deals across the board, which will bring “blips where the market sells off due to some uncertainties.” The Treasury yield curve, according to him, will continue to steepen.