Lending Club became the first peer-to-peer lending platform to make an initial public offering (IPO) on Thursday. Initially the shares were priced at $15.00 but by the time trading started they were being sold at $24.75. The San Francisco-based company is now valued at a whopping $8.9 billion!
The company was founded in 2006 and already has earned themselves the 15th largest valuation of all banks in the US, “and surpassed the value of the remaining 820 or so U.S. banks,” a Top Tech News article reported. The company’s About Us section says that their mission is to:
“[C]reate a more efficient, transparent and customer-friendly alternative to the traditional banking system that offers creditworthy borrowers lower interest rates and investors better returns. We operate fully online with no branch infrastructure, and use technology to lower cost and deliver an amazing experience. Today, we’re America’s leading online credit marketplace, and we’re radically changing the way lending operates – every day.”
Lending Club has funded more than $6.2 billion in loans and paid more than $585 million in interest to investors as of September 2014. Those are some pretty large numbers! Those stats are prominently featured on the company’s website in an effort to stick to their commitment to operating a transparent business.
Lend Academy blogger Peter Renton, who was invited to the opening celebration at the New York Stock Exchange wrote a recap of the day’s events:
“Then it was upstairs for a sit-down breakfast where we heard speeches from Renaud [CEO] as well as Lending Club board members John Mack (the former CEO of Morgan Stanley) and Jeff Crowe of Norwest Venture Partners (they invested in Lending Club’s Series A back in 2007). We also heard some brief remarks from Larry Summers (the former Treasury Secretary) who patched in remotely.”
Norwest Venture Partners (who became limited partners with Wells Fargo & Co. in 1998 and enables them to make equity investments) now has a stake in Lending Club worth over $1.25 billion, according to the Financial Times.
Referred to as America’s #1 credit marketplace, Lending Club is leading a growing number of companies who are looking to connect investors and borrowers online. With the rise in crowdfunding’s popularity many are beginning to see possibilities for the transformation of traditional financing into models simpler, more sustainable models. This recent IPO is yet another case in favor of the practice, which has had its critics.
In reality less than 10% of loan applications submitted to Lending Club are approved, and they only accept those from low risk borrowers. They also offer diversified investments that make it easier for investors to earn a steady income from their contributions.
