This marketplace will allow institutional investors to purchase loans originated by the Avant technology platform.
The $400 million financing arrangement to purchase newly originated loans led by KKR represents another opportunity for Avant to partner with this leading global investor. KKR is joined by Jefferies and Victory Park Capital in this arrangement.
Al Goldstein, CEO of Avant, commented:
“KKR is a best-in-class financial institution with a longstanding reputation for building significant value for its partners. We are thrilled to join forces with KKR and build a new platform where investors can purchase Avant loans originated through the Avant platform. The new sources of capital obtained through the Avant Institutional Marketplace will allow our company to focus on growth and continue to serve the unique financial needs of the everyday consumer in the U.S. and abroad.”
Michael O’Donovan, Managing Director of KKR, explains that the launch of the Avant Institutional Marketplace is a significant step in building upon Avant’s leadership position in the emerging online lending market.
“Avant is driving changes for the lending industry and has demonstrated a strong track record of excellence. We support Avant’s dedication to innovation in this emerging market and, we believe the Avant Institutional Marketplace will deliver attractive, risk-adjusted returns to our investors.”
According to Crain’s Chicago Business Avant was Chicago’s most funded company in 2014, raising over $1.4 billion in funding to date.
Suk Shah, CFO of Avant, notes this transaction signifies an important step in the next phase of Avant’s financing strategy.
“Avant Institutional Marketplace offers institutional investors access to this new, emerging asset class and benefits Avant by diversifying funding sources and adding off-balance sheet flexibility.”
Other investors in the company include Tiger Global Management, August Capital, Victory Park Capital, Peter Thiel, KKR, DFJ Growth, and RRE Ventures. It has issued more than 175,000 loans through the Avant website. By the end of Q2 personal loan originations since inception are projected to exceed $1 billion.
At the beginning of April Avant acquired ReadyForZero, an online and mobile planning tool that has successful helped consumers pay down $200 million in debt. This is part of Avant’s strategy to enhance customer experience by integrating consumer finance management tools into the site.
In a separate round of funding VPC Specialty Lending Investments has made a £11.7 million investment by way of a balance sheet loan to Avant. The investment utilises part of the available capacity under Victory Park Capital’s existing $500 million credit facility with Avant.
Victory Park floated its Specialty Lending Investments fund in March this year. It raised £200 million and the prospectus said that the company will be targeting a net dividend yield of 8% and a net total return in excess of 10% per annum. Since its inception Victory Park Capital has completed about $2.9 billion of investments which includes a wide range of loans to small and medium sized businesses, subprime, near-prime and prime consumers. Following the investment in Avant Victory Park will have committed more than 37% of the net IPO proceeds.
