RiverNorth Capital Management LLC is the latest investment firm to seek yield from peer-to-peer lending, according to a registration filing submitted this month to the U.S. Securities and Exchange Commission.
The $3.5 billion Chicago fund manager is setting up what would be the first closed-end fund in the U.S. to invest primarily in loans, securities and equity tied to lenders such as LendingClub Corp. or Prosper Marketplace Inc. that participate in the so-called P2P market, according to Bill Ullman, a senior adviser for Orchard Platform, on the firm’s website.
The fund will be run by RiverNorth chief investment officer Patrick Galley and Philip Bartow, who was hired recently from Spring Hill Capital Partners, according to the filing. It is designed to provide a “high level of total return” and will offer monthly distributions to shareholders, according to the filing. The firm seeks to register 1,000 shares at a proposed maximum price of $25 per share, another filing shows.
Closed-end funds differ from open-ended ones in that they are designed to attract a more permanent type of capital and typically aren’t subject to withdrawals. Other investment firms such as Ranger Capital Group and Marshall Wace have started consumer-debt funds in Europe. That sort of structure may attract individual investors looking for longer-term exposure to the sector as the market for personal loans arranged online takes shape.