Lending Club Gives Price Guidance

By Georgina McCreadie on 2nd December 2014

P2P/Marketplace Lending

Lending Club announced in a filing to the SEC on Monday that it plans to price the stock for its IPO at $10 to $12 a share. The IPO is seeking to raise up to $692.4 million by offering 57.7 million shares. Just under 13.5% of these shares are being sold by existing shareholders reducing their stakes.

Lending Club Gives Price Guidance

If the IPO prices at the midpoint of that range the company will be valued at $4 billion. The maximum valuation at $12 a share would be  $4.33bn. This is somewhat less than recent speculation – valuations have been as high as $6 billion with the consensus settling around $5bn. Whereas in April during its $65 million funding round Lending Club was valued at almost $3.8 billion. 

There is huge interest in this landmark IPO. All the talk surrounding its valuation has made it clear that determining a price is difficult. One of the most important metrics is the amount of loans it has originated and this figure stands at about $6.2 billion since its inception in 2007. There are few comparable companies currently listed on public exchanges that can be used to benchmark the Lending Club valuation. One of the few, perhaps, is TrustBuddy, a European based P2P lender that listed on the Nasdaq OMX in 2011. However there are significant differences in business model and scale between the two companies.

Lending Club is roadshowing this week to secure interest from investors. The platform is already well known by many investors as a significant amount (about 80%) of the lending done through the platform comes from institutions. Lending Club also has a number of significant equity investors on board already. These include BlackRock, T. Rowe Price, venture capital firm Kleiner Perkins Caufield & Byers and Google. Alongside, some important figures on its board, including John Mack, former CEO of Morgan Stanley and Larry Summers, the former Treasury

secretary.

Although the exact timing of the IPO is yet to be confirmed, we are now seeing the very final stages of a process that began to be talked about over 12 months ago. It is highly likely that the deal will price in the next week or so.

This IPO is important for the credibility of the peer-to-peer sector as a whole as it will give an indication of how it is perceived by investors. There are six other technology companies about to IPO who set their terms on Monday. Lending Club is the largest it will be interesting to see how it performs against these other tech firms.   

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