Money Talks: This Week in the World of P2P Lending
This week’s top headline: Lending Club’s IPO. We can all stop holding our collective breath now!
There is a rapidly-growing category of companies looking to pair investors with loan seekers with the added perk of below-average interest rates (sweet deal, IKR?), and the fairest of them all as of this morning is Lending Club.
We’re shaking up the banking industry y’all.
Lending Club proved they are not only here to stay but here to conquer by arranging more than $6 billion in loans since 2007. This SF-based company just got it’s own little holiday present. Lending Club raised $865.5 million with their IPO today, and priced 57.7 million shares at 15, above the high end of its upwardly revised expected range of 12-14.
Lending Club opened at 24.75 and was near 23 in midday trading on the stock market, up 53%. It was the second-biggest IPO of 2014. This success has sparked a lot of clearleaders for the company and the industry alike. “Give me a P2P!”
There are other players in this P2P game, including Prosper Marketplace, OnDeck, and Funding Circle, but Lending Club is the first IPO (initial public offering) in this category.
LendLayer’s Chief People Officer, Jin, was lucky enough to be at the event at the New York Stock Exchange today. In the flesh.
Why is this a BFD?
“When it comes to applying for a loan, we have been pretty much stuck in the 20th century,” said Peter Renton, a blogger and founder of the website Lend Academy, which focuses on P2P lending. “What Lending Club and others in this space are doing is transforming an industry with a more efficient process.”
After the financial crisis of 2007-08, banks basically stopped giving out small loans to consumers and small businesses, so someone needed to come in and save the day in order to fill that gap. Clearly it’s working out for the companies who took that leap.
Check out those snazzy Lending Club jackets.
But wait, what second beacon of light is looming in the not-too-distant future?
OnDeck last week announced plans to raise $170 million by offering 10 million shares at a price range of 16 to 18. That’s two big players in the P2P lending game making waves, so there should be a lot to stay tuned for!
Will all of this finally make finance startups cool? I mean, we already knew we were cool, but now everyone else will know it. This news will help financial starups disrupt the crusty old banking industry. We’re building a little faith that entreprenuers can take on big, boring, technical, regulated financial institutions and have an impact. The little guy in the industry is growing up so fast * tear *.
It’s really hard to compete with big banking institutions with large-scale consumer-lending, but this is the first sign that it can be done. It’s also important to consider that larger-scale finance insterests are actually some of Lending Club’s investors, so sometimes these things work hand-in-hand rather than butting heads.
If you want some more information about the Lending Club IPO for some light reading by the fire while the winter weather does its thing outside, check out some lengthly discussions on the Lending Club forums on the subject.
