Prosper Exploring Majority Stake Sale?

By Ryan Weeks on Friday 27 May 2016

Alternative Lending

Prosper Marketplace has hired a pair of investment banks to explore the sale of equity in the company, among other “strategic alternatives”.

Prosper has hired Financial Technology Partners LP and JPMorgan Chase & Co, according to a Reuters article which cites people familiar with the matter. Prosper is said to be considering options that include selling a minority or majority stake in the company, in an effort to shore up its funding base.

The amount of capital being sought by Prosper is at present unclear. The company is said to have retained advisers in order to raise around $150m prior to the coming to light of Lending Club’s recent difficulties. The current climate is not especially favourable to fundraising. Lending Club’s share price fell to an all time low of around $3.50 in the aftermath of former CEO Renaud Laplanche’s departure. Lending Club floated at $25 a share.

Prosper last raised money in April 2015, when the company closed a $165m Series D round which was led by Credit Suisse NEXT Investors. 

US marketplace lenders have been running up against a waning of investor demand over the past few months. Prosper itself felt the squeeze earlier this year when a bond offering that was backed by the platform’s loans received a cold reception with investors (as reported by the Wall Street Journal). Prosper announced a rate hike on Tuesday for the second time this year, in an effort to reenergise institutional demand for its loans. The plan seems to have worked, with Blue Elephant Capital Management reportedly poised to resume purchases of Prosper loans, after having paused the programme last year.

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