LendingClub Said to Work With Jefferies to Add Loan Buyers

  • Potential buyers include Fortress, JC Flowers, Reuters says
  • CEO Sanborn sought to reassure investors of firm’s viability

LendingClub Corp., the online marketplace lender that plunged more than 40 percent since the surprise resignation of its chief executive officer this month, is working with Jefferies Group to line up purchasers for its loans, according to a person briefed on the matter.

Jefferies will be working with a range of possible buyers of the debts, said the person, who asked not to be identified because the discussions are private. Reuters reported on the relationship earlier Friday.

LendingClub has been working to shore up investor confidence since May 9, when it said that CEO Renaud Laplanche had resigned after internal reviews. The board cited two incidents: The firm’s staff altered application dates on $3 million of loans before their sale, and Laplanche failed to disclose his interests in a fund that LendingClub was considering investing in.

“Since our announcement last week, we have been approached by a number of existing and potential new investors about large purchases of loans on our platform,” the company said in an e-mailed statement. “These are complex discussions that by their nature will take some time to complete. Meanwhile, our platform continues to operate with existing investors and more returning each day.”

Potential investors include private equity firms Apollo Global Management, Fortress Investment Group and JC Flowers & Co., Reuters reported, without saying where it got the information. Spokesmen for Jefferies, Apollo and JC Flowers declined to comment, while a spokesman for Fortress didn’t immediately respond to voice and e-mail messages.

Lending Club’s internal inquiry found that $22 million of loans that were sold to Jefferies didn’t meet the New York-based investment bank’s criteria, people familiar with the matter have said. LendingClub said last week that it bought back those debts from Jefferies and sold them to another investor.

The company has sought to calm investors’ nerves, sending an e-mail late Thursday to those who purchase its loans to assure them about the viability of the company and its ongoing lending and servicing operations.

“Let me assure you that we are in a strong financial position with a substantial amount of cash and securities on our balance sheet -- $868 million,” Acting CEO Scott Sanborn wrote late Thursday in an e-mail to investors who buy the company’s loans. “We plan to be around for many years to come.”

Prosper Marketplace Inc., LendingClub’s chief competitor, met with investors including Fortress about potential capital injections, a person with knowledge of the matter said this week. The talks are preliminary and may not lead to a deal, the person said.

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