LEND OF PLENTY
‘Club’ IPO tops forecasts, pulls in $870M
WALL STREET traders jumped at the chance to join a new club.
Shares of peer-to-peer loan marketplace LendingClub spiked nearly 70% at one point on Thursday, its debut as a publicly traded company.
The San Francisco firm’s initial public offering Wednesday night was $15 a share, higher than the expected range of $12 to $14 a share, raising $870 million.
But buoyed by investor optimism over the burgeoning peer-to-peer lending industry, LendingClub’s stock price opened at $24.75 on the New York Stock Exchange.
It closed at $23.43, a rise of 56% that valued the company at nearly $9 billion.
The heightened interest in LendingClub “leaves a good taste in investors’ mouths for the company and for this kind of consumer lending business in general,” Josef Schuster, founder of IPO research firm IPOX Schuster, told the Daily News.
LendingClub’s coming-out part y a lso benef ited from good timing — plunging oil prices and the subsequent sel lof f of ener g y stocks mean investors need to put their money somewhere, according to Schuster.
“There’s been a definite shift in portfolio allocations as oil prices drop,” he said.
“Consumer-finance-related companies have done pretty well, and so investors will be putting money into the sector that stands to benefit the most from falling oil prices, and that’s the consumer.”
Co-founded in 2007 by CEO Renaud Laplanche, LendingClub pioneered the peer-to-peer lending industry that now includes dozens of smaller competitors. It bypasses the traditional bankloan process by connecting borrowers with lenders for personal loans up to $35,000 that can be used for everything from paying off debt to paying for a vacation.
Small businesses can borrow up to $100,000.
Borrowers pay lower interest rates than what’s offered by credit cards; investors can fund a variety of loans for as little as $25 each and receive steady monthly income as borrowers make payments.
LendingClub, which on its website says it has arranged more than $6.2 billion in loans and paid nearly $600 million in interest to investors, generates revenue through transaction and service fees on
the loans.