Lending Club and HomeAdvisor signed a multi-year marketing deal, that will make Lending Club the exclusive partner providing access to loans for consumers seeking home improvement project financing through the HomeAdvisor website. HomeAdvisor is an online home improvement marketplace where homeowners can connect with pre-screened local home repair and improvement professionals. Continue reading
US
Goldman Sachs Quantifies Potential Impact of US P2P Lending on Bank Profits
Goldman Sachs published the research paper ‘The Future of Finance’ analysing the potential impact of alternative finance companies, especially p2p lending marketplaces, on the US banking sector.
Goldman Sachs states ‘We see the largest risk of disintermediation by non-traditional players in: 1) consumer lending, 2) small business lending, 3) leveraged lending (i.e., loans to non-investment grade businesses), 4) mortgage banking (both origination and servicing), 5) commercial real estate and 6) student lending. In all, [US] banks earned ~$150bn in 2014, and we estimate $11bn+ (7%) of annual profit could be at risk from non-bank disintermediation over the next 5+ years.‘
International P2P Lending Services – Loan Volumes February 2015
As February was a shorter month, loan originations fell compared to January with some exceptions. Ratesetter and Funding Circle are in a neck-and-neck race for largest volume figure this month. Prosper and Lending Club no longer publish origination data for the most recent month. I added two more services. I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors.
Table: P2P Lending Volumes in February 2015. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
Notice to p2p lending services not listed: Continue reading
P2P Lending Marketplace Bondora Fuels European Expansion Plans
P2P lending service Bondora, headquartered in Tallinn, announced that they raised 5M US$ Series A round led by Valinor Management to fuel further expansion plans for cross-border lending in Europe. Richard Fay and Ragnar Meitern also invested. Bondora was the first p2p lending service doing cross-border lending for retail investors. Bondora is currently facilitating loans to borrowers in Estonia, Spain, Finland and Slovakia from investors in all European countries. Bondora states that investments on the marketplace have consistently yielded premium returns to investors while simultaneously delivering competitive rates to borrowers through efficiency and lower interest rate spread.
Uniting European markets under the roof of a single platform creates a huge opportunity given the size of the population in the continent and the volume of outstanding debt. Thus, Eurozone countries alone account for 340 million people and EUR 1.1 trillion in outstanding consumer credit debt, a market equivalent to US. Lending to borrowers in markets that are independently relatively small (even Germany, the largest economy in Europe is only approximately twice the size of California in terms of GDP) allows earning premium returns due to lack of competition among traditional lenders.
Pärtel Tomberg, CEO and co-founder of Bondora, said he hoped the cash infusion from Valinor Management, the hedge fund run by David Gallo, will allow his company to build the more complex infrastructure needed to make more cross-border loans. ‘The goal is really to become a global market,’ Pärtel Tomberg said in an interview. ‘There are no precedents in the world on many of the things we want to do.’
The company also wants to attract institutional lenders from the US.
A possible mid-term competitor might be Lending Club. But Lending Club said in the investor conference call on Tuesday that they will focus on the US market and will not use the capital raised in their December IPO on international expansion plans in the near future. Renauld Laplanche is however monitoring international developments in the market: ‘We’ll see what model is really the winning model in any particular geography.’ Continue reading
Lending Club Fourth Quarter Results
Lending Club just announced the 4th quarter numbers in the investor conference call.
CEO Renauld Laplance stated: “We have continued to expand our reach through 2014 by doubling the size of the business again, while continuing to invest heavily in future growth and risk management. Our IPO in December was an important milestone in the life of the company, and everyone at Lending Club is excited about the next 5 to 10 years and committed to delivering more value and a great experience to our customers. 2015 is going to be another investment year, and we intend to continue growing originations and revenue at a fast, yet deliberate pace.”
Fourth Quarter 2014 Financial Highlights
Originations – Loan originations in the fourth quarter of 2014 were $1,415 million, compared to $698 million in the same period last year, an increase of 103% year-over-year. The Lending Club platform has facilitated loans totaling over $7.6 billion since inception.
Operating Revenue – Operating revenue in the fourth quarter of 2014 was $69.6 million, compared to $33.5 million in the same period last year, an increase of 108% year-over-year. Operating revenue as a percent of originations, known as our “revenue yield”, in the fourth quarter was 4.92%, up from 4.79% in the prior year.
Adjusted EBITDA(3)  – Adjusted EBITDA was $7.9 million in the fourth quarter of 2014, compared to $6.5 million in the same period last year.
Net Income/Loss– GAAP net loss was ($9.0) million for the fourth quarter of 2014, compared to a net income of $2.9 million in the same period last year. Lending Club’s GAAP net loss included $11.3 million of stock-based compensation expense during the fourth quarter of 2014.
Earnings (Loss) Per Share (EPS) Â – Basic and diluted loss per share was ($0.07) for the fourth quarter of 2014 compared to EPS of $0.00 in the same period last year.
Adjusted EPS(3)– Adjusted EPS was $0.01 for the fourth quarter of 2014 compared to $0.02 in the same period last year.
Cash and Cash Equivalents – As of December 31, 2014, cash and cash equivalents totaled $870 million, with no outstanding debt.
“We are entering 2015 with strong momentum on many fronts, and we intend to continue to execute on our strategy of fast yet disciplined growth,” said Carrie Dolan, CFO of Lending Club. “We will also continue to aggressively invest in product development, engineering, process automation, and the buildup of support and risk management functions to pave the way for our long term growth opportunity.”
Outlook
Based on the information available as of February 24, 2015, Lending Club provides the following outlook:
First Quarter 2015
Operating Revenues in the range of $74 million to $76 million.
Adjusted EBITDA(3) in the range of $6 million to $9 million.
Fiscal Year 2015
Total Revenues in the range of $370 million to $380 million.
Adjusted EBITDA(3) in the range of $33 million to $42 million
(3) Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures
Strategy is to focus on the US market in the near future. There is no urgency to expand into international markets. There is not a lot of clarity which of the different models in particular geographies might prevail in customer adoption and get blessed by regulator.
Victory Park Capital will invest 420M in P2P Lending Loans on Funding Circle USA
US asset manager Victory Park Capital will invest 420 million US$ over the course of the next 3 years in p2p loans to SMEs in the US via p2p lending marketplace Funding Circle USA. This agreement follows an earlier deal where Victory Park Capital agreed to lend 150 million GBP via Assetz Capital over the next five years.
With a single institutional investor planning to fund these volumes, these are staggering numbers.