OnDeck has agreed to a lucrative forward purchase agreement with an affiliate of the ever active investment bank Jefferies Group.
The leading US small business lender has signed a deal giving Jefferies the ability to purchase up to $500m in small business loans via the OnDeck Marketplace over the next year. The news comes off the back of the release of OnDeck’s Q2 2015 numbers – which highlighted a marked uptick in institutional activity in the platform’s marketplace. A record $143m of small business loans were sold of via the platform between April 1st and June 30th – a 55% uptick on the previous quarter.
OnDeck – traditionally a balance sheet lender – first opened itself up to institutional investors in late 2013. Jefferies is in fact a repeat customer, having been involved in the OnDeck Marketplace since March 2014. Of the $500m commitment, Jefferies Managing Director Michael Wade said:
“We look forward to continuing to work with our client, OnDeck, and its lending platform to structure and deliver innovative investment opportunities to our capital markets investor clients.”
It sounds as though Jefferies is likely to bundle up a securitization of OnDeck loans, which would be the platform’s first, as far as we’re aware. The OnDeck arrangement smacks of the deal struck between Jefferies and CircleBack Lending in September 2014 – in which the two companies agreed to the sale and securitization of up to $500m of consumer loans. We know that Jefferies also plays in the Avant Institutional Marketplace, and was involved in Bond Street’s recent $110m debt and equity fundraise.
Returning to the OnDeck deal, Howard Katzenberg, the platform’s CFO, summarised:
“The agreement not only demonstrates Jefferies’ interest in Marketplace, but it also gives them the ability to expand their portfolio and help even more small businesses get the capital they need to grow.”