Soros, Jefferies Back P2P Startup of Ex-Mortgage Trader

  • Perry Rahbar traded mortgage-backed securities at JPMorgan
  • Company analyzes P2P loans for professional investors

Soros Fund Management and Jefferies Group LLC are investing $5 million in a startup founded by former mortgage-bond trader Perry Rahbar that analyzes consumer debt for professional investors, according to a person with direct knowledge of the matter.

Rahbar’s company, called DV01, helps institutional investors decide which consumer loans to finance through marketplace lenders like Prosper Marketplace Inc. and Lending Club.

DV01’s fundraising is the latest sign of Wall Street’s growing interest in marketplace lenders that link up individuals and institutions that want to invest in debt with consumers and small business owners that want to borrow. The industry has doubled its loan volume every year since 2010, and is estimated by one of DV01’s competitors to have made a total of $50 billion of loans through the end of 2015.

As a growing number of hedge funds have started investing in marketplace loans, more analytics firms have sprouted up to help them evaluate the debt. DV01’s competitors include PeerIQ and Orchard Platform.

Soros last year committed $2 million to DV01 in a separate round of financing, two people with knowledge of the matter said. The latest $5 million investment from Soros and Jefferies is in the form of a convertible notes. The company takes its name from a debt market term for the sensitivity of a loan or bond’s price to changes in yields.

Jefferies spokesman Richard Khaleel and Soros spokesman Michael Vachon declined to comment.

Rahbar is a former mortgage-backed securities trader at JPMorgan Chase & Co., which he left in 2013, and Bear Stearns Cos. Other Wall Street professionals have joined marketplace lenders, too. Ron Suber, a former Bear Stearns salesman, is president of Prosper Marketplace. John Mack, former chief executive officer of Morgan Stanley, sits on LendingClub’s board.