LendingClub Raises $870 Million in IPO Poised to Change FinanceLeslie Picker and Noah Buhayar
LendingClub Corp. is getting a larger-than-expected cash infusion from an initial public offering after pricing an increased number of shares above the marketed range.
The company, which arranges loans to individuals and small businesses over the Internet using funds from investors who can commit as little as $25, raised $870 million in the IPO. San Francisco-based LendingClub and some of its venture capital backers sold 58 million shares for $15 each, according to a statement yesterday, after offering 57.7 million for $12 to $14. The company raised the range this week from $10 to $12.
Chief Executive Officer Renaud Laplanche founded the company before the financial crisis, seeking to use technology to make borrowing cheaper and easier. Since then, the peer-to-peer lender has facilitated more than $6 billion in loan originations. Now, its IPO is serving as a barometer for an entire industry of alternative lenders that will be looking to see how the public markets value these types of businesses.
LendingClub earns revenue by charging transaction and servicing fees on the loans it helps issue and lists online for investors to fund. Its main products are three- and five-year unsecured consumer loans with interest rates that average about 14 percent. Investors of all stripes -- from individuals and hedge funds to banks and asset managers -- are now funding loans on the platform.
That’s helped boost originations. LendingClub’s net revenue more than doubled to $144 million in the first nine months of the year, compared with the same period in 2013. While the company has posted losses this year, it was profitable during 2013.
LendingClub, which sold 50.3 million of the shares in the IPO according to the statement, will use the proceeds for working capital, expenditures and debt repayment. The company may use some of the funds for acquisitions as well.
Existing investors Canaan Partners, Kleiner Perkins Caufield & Byers and Union Square Ventures offered 7.7 million shares in the offering.
LendingClub’s model has attracted some high-profile backers. Former Morgan Stanley Chairman and Chief Executive Officer John Mack sits on LendingClub’s board, as does Mary Meeker, who previously worked as a research analyst at the firm and is now a partner at Kleiner Perkins. Larry Summers, the former U.S. Treasury secretary and president emeritus of Harvard University, is also a director.
Morgan Stanley and Goldman Sachs Group Inc. managed the offering. The shares, listed on the New York Stock Exchange under the symbol LC, will begin trading today.