Online peer-to-peer banker LendingClub files for IPO

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LendingClub Corp, the world’s largest marketplace directly connecting borrowers and investors, filed with U.S. regulators for an initial public offering common stock.

Peer-to-peer (P2P) lending lets investors lend directly to individuals and and uses low-cost platforms to cut out banks.

LendingClub has an interesting model and had found a niche in the marketplace as bigger banks are scaling back riskier lending, founder IPO research firm IPOX Schuster LLC Joseph Schuster said.

In a world rock-bottom interest rates, P2P loans offer attractive returns, but lenders must also assume the risks lending to small carry a higher risk of default.

Such loans have rates of interest because they are usually given without collateral.

The P2P lending industry rose to prominence during the global financial crisis, plugging a hole left by the reluctance of cash-strapped banks to lend to small .

The traditional banking has been hurt by the underwriting and servicing costs associated with lending to small businesses, creating an opportunity for non-traditional lenders to cater to the growing demand for alternative financing.

EBay Inc’s fast-growing payments unit, PayPal, also launched a small lending platform last September.

“There’s investor interest for the and, in terms of pricing, it’s going to be a competitive environment,” Schuster said, adding consumer financial IPOs this year have, on average, been disappointing.
Bailed-out auto lender Ally Financial Inc and General Electric Co’s credit card unit, Synchrony Financial, which went public this year, priced their IPOs at the lower end of the expected range.

Santander Consumer USA Holdings Inc’s, the auto-finance unit of Spanish bank Santander, has lost about 22 percent of its value since going public in January.

San Francisco, California-based LendingClub is headed by Renaud Laplanche, a former head of product for Oracle Corp.

Former U.S. Treasury Secretary Lawrence Summers and former Morgan Stanley Executive John Mack are on its board.

The company has facilitated more than $5 billion in loans since its launch in 2007.

LendingClub’s revenue more than doubled to $87.3 million in the six months ended June 30 from a year earlier.

Its investors include Norwest Venture Partners, Foundation Capital LP, Morgenthaler Venture Partners and Canaan LP.

Morgan Stanley, Goldman Sachs & Co and Citigroup are the underwriters for the offering, the company said in a preliminary filing on Wednesday. (

LendingClub filed to raise $500 million from the offering, but did not reveal how many shares it planned to sell.

The amount of money a company it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different. (Reuters)[eap_ad_3]