Leading US marketplace lender Prosper secures deal that will see $5bn in loans purchased over the next two years.
Prosper, one of the largest marketplace lenders in the world, has clinched a $5bn funding deal from a consortium of institutional investors. The investors are affiliates of New Residential Investment Corp., Jefferies Group LLC and Third Point LLC, as well as an entity which is principally managed by Soros Fund Management LLC. The group will earn an equity stake in Prosper over time, depending on the amount of loans purchased.
A warehouse facility of $1bn has been secured in tandem to the two year funding deal, which will be provided by Deutsche Bank, Credit Suisse, Goldman Sachs and Morgan Stanley.
News of the $5bn deal has been circulating since the summer of last year, when marketplace lenders in the US were going through something of a crisis period. The firing of Lending Club founder Renaud Laplanche in May brought matters to an ugly head, but in truth investor confidence had been deteriorating since the early stages of 2016.
The kind of investors that are contributing the $5bn, and indeed the sheer size of the deal, will lead many to suggest that it marks a turning point for marketplace lenders after a difficult year. That may well be true on two fronts. On the one hand, Prosper's funding base now seems very much secure, for the foreseeable future at least. On the other, retail money seems increasingly less important for the firm, despite efforts to sharpen its consumer-facing proposition in June of last year.
Financial Technology Partners (FT Partners) served as strategic advisor to Prosper Marketplace and its board of directors on the landmark transaction, with DV01 acting as loan data agent to the consortium.
“We’re very pleased to be working with this consortium of investors, and believe they will be great long-term partners as we continue to build a large-scale business,” said David Kimball, who took over from Aaron Vermut as CEO of Prosper Marketplace in November of last year. “This deal gives us the funding stability and additional capital markets expertise we need to continue to grow our marketplace and achieve profitability in 2017.”