Lending Club IPO and SoFI

Just to update you guys on the P2P space:

In its nearly eight years, Lending Club, the biggest marketplace for peer-to-peer loans, has garnered fans across Wall Street. Now, the company hopes to bring even more investors into its fold.

The company filed to go public on Wednesday, hoping to seize on the rapid success of the peer-to-peer lending industry as it grows into a robust alternative to traditional bank loans.

In a prospectus, Lending Club listed $500 million as a preliminary fund-raising target, though that is generally regarded as a placeholder and the firm could seek more. But even at that level, it would rank it among the 10 biggest-ever stock market debuts of an Internet company.

http://dealbook.nytimes.com/2014/08/27/lending-club-leader-in-peer-to-peer-plans-i-p-o/?_php=true&_type=blogs&_r=0


Additionally, SoFi is shaking up things in the industry. They are much bigger now than when this article was published.

SoFi (Social Finance) just raised $80 million. How will it celebrate? By offering mortgages and personal loans, naturally.

The company was founded by Stanford University Graduate School of Business graduates in 2011 to take on student loans. The idea was that students could finance their schooling by borrowing from alumni of their school, rather than with traditional student loans. The affinity between borrower and lender was meant to make the loans safer, even as student loan debt in U.S. now totals approximately $1.2 trillion.

Mortgages are the big daddy of consumer loan products and a startup lender offering them is kind of a big deal.

The new Series C founding round was led by Discovery Capital Management and also included Wicklow Capital, Peter Thiel, Renren and Baseline Ventures. SoFi has raised a total of $161 million to date.

SoFi has loaned $450 million to more than 5,000 members that have saved an average of $9,400 by refinancing or consolidating their student loans, the company said. Loans are typically made at a fixed 5.99% rate. Lenders can expect a 5% return on their investments.

As part of the effort to mitigate credit risk, SoFi also offers career services, unemployment insurance and an entrepreneur program for its borrowers. We would classify that as a novel approach to risk management.

http://www.bankinnovation.net/2014/04/sofi-flush-with-funds-considers-offering-mortgages/

Since we’re here and I’m assuming you continued to invest with them, what has the experience been like over the past year (I don’t do the P2P thing)?

Must have an exciting life… Not sure what this is about. I sold at a much higher price a few days after the IPO. Life continues: My notes still are doing well and you are still, well…

I mean following markets is my job, so…

Anyhow, real winner of a company. IPO pop is expected.

rawraw - You should be pleased to know that when I launched Chrome, opened Google Finance, marvelled at my portfolio, then read the headlines and noticed Lending Club was a dumpster fire, I thought of you. I almost started a thread in “Investments” (where this should be, I mean, honestly…) but I drank so much champange yesterday my piss is still bubbly and I decided I’m too hungover for this shit.

i did much of the same.

I did the same, except for marvelling at my portfolio and the bubbly piss parts.

So…the two best parts?

It seems like he is invested in the loans and not necessarily the stock any more.

Basically. Though I had Indian food for lunch, so that’s good.

http://www.americanbanker.com/bankthink/ok-marketplace-lenders-ill-say-it-told-you-so-1080845-1.html

If institutional investors aren’t interested in lending club (which they aren’t) you’re basically left with the American middle class (which has essentially no savings based on well known statistics) trying to lend to itself and unsurprisingly loan volumes are flat or falling). Otherwise you’re just left with a less efficient and more expensively bank with poor oversight and controls.

$3.50 ?!

If LC goes under (the irony), will there be any incentive for existing debtors to finish paying off loans?

I don’t think the company solvency is directly related to the debtors obligations. The customer funds should be kept seprarate from the company’s debt.

^bad credit scoore?

I think BS meant that when an average Joe who consolidated his cc cards with LC sees in the news that LC went under, he will decide there is no need to payoff the loan. So there will be spike in defaults!

I don’t follow that train of thought. If you hear bad news about Visa company, would you ignore your credit card bill?

Rawraw where you @ son?

I guess the bad news could deter future lenders from investing in Lending Club loans, and this could push LC further down the spiral. But unless LC is fraudulently comingling funds from existing loans, the effect on default rates is not obvious.

I wouldn’t personally. But I think It will cross some people’s mind

And by troubles, I mean bankruptcy

if citi bank goes under do you stop paying your mortgage? no, someone else will buy the debt and the debt collectors will come looking for you