Avant Said to Slash Target for Online Lending, Reduce StaffBy and
New loans may drop by half from a monthly rate of $200 million
Firm is offering severance to employees who voluntarily leave
Avant Inc., the online lending marketplace valued at almost $2 billion last year, is slashing a target for new loans and shrinking its workforce as the industry’s rapid growth falters, according to people with knowledge of the situation.
The Chicago-based firm expects originations will fall about 50 percent from a $200 million monthly rate, and plans to reduce the number of workers in line with that, one person with knowledge of the strategy said, without specifying how many people will leave. The people asked not to be named discussing internal decisions.
Founded by an entrepreneur who made a fortune in payday lending, Avant grew quickly and in September raised money from investors including private equity firm General Atlantic at a valuation of almost $2 billion. The venture, which also has backing from Balyasny Asset Management and Tiger Global Management, specializes in unsecured loans to non-prime borrowers. It’s now joining a growing number of competitors in cutting jobs amid signs that there aren’t enough investors to continue fueling the industry’s rapid growth.
Carolyn Blackman Gasbarra, a spokeswoman, confirmed the company is adjusting targets and said it’s offering severance packages.
“As the lending industry faces continued uncertainty in the capital markets and volatility of the online lending category, we are moderating loan volume to focus on the immediate profitability of our core personal loan products,” she said in an e-mailed statement. “As such we have made the difficult decision to launch a voluntary severance offering to our employees.”
The closely held firm has more than 800 workers, according to its website. In December, it told a Crain’s publication it might add 600 people this year. The venture has arranged more than $3 billion of debt since it began operations three years ago.
Just months ago, Wall Street firms were vying to do business with specialty-finance startups that make unsecured consumer loans online. Securities backed by the loans were a big draw for investors seeking relatively higher yields and short maturities. Investors including Jefferies Group, Victory Park and KKR & Co. have purchased Avant’s loans and repackaged them into bond deals over the past year.
In April, the company said Sheila Bair, the former head of the U.S. Federal Deposit Insurance Corp., was joining the board as regulators scrutinize the business of providing credit to consumers over the Internet. The next month, LendingClub Corp.’s founder Renaud Laplanche resigned amid internal reviews, rattling the industry and leading many investors to pull back from funding its growth.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.