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Online Lender SoFi Starts Hedge Fund to Invest in Its Own Loans

  • Fund could also invest in debt from other online lenders
  • Vehicle is designed to fuel SoFi's growth, tap new investors

Social Finance Inc., a rapidly growing online lender, is hoping to stoke investor demand for the debt it originates by starting a hedge fund that will buy its own loans -- and potentially those of its competitors.

In recent weeks, the company established the SoFi Credit Opportunities Fund and raised $15 million from investors, according to a regulatory filing and a company spokeswoman. It’s seeking to attract more money from wealthy individuals, funds of hedge funds and other institutional investors that may not want to buy whole loans directly from the company or securities backed by the debt.