Chinese billionaire Chen Tianqiao has bought a close to 12 percent stake in Lending Club.
Singapore-based private investment group Shanda Group, which is led by Chen, said on Monday that it saw the online lender’s battered stock as an attractive buying opportunity.
The sale of the 11.7 percent stake comes as growth in Lending Club’s loan originations is slowing and regulatory interest in the sector is increasing.
Lending Club shares were up in yesterday’s trading. The stock had fallen more than 40 percent since the May 9 announcement of Chief Executive Officer Renaud Laplanche’s resignation after an internal investigation found the company had knowingly sold 22 million US$ of loans that did not match the buyer’s specifications.
‘We have been in discussions with Shanda regarding their investment, and we look forward to a continued dialogue with them,’ a Lending Club spokesman said.
Shanda Group said in a statement that it was a “strong believer” in the business model that Lending Club has pioneered and was “positive on its long-term prospects as it continues to evolve and refine its business.”
The company bought a total of about 29 million Lending Club shares for $148.7 million. It also has call options to buy 15.7 million shares for $11.2 million. Some of the shares were bought before Laplanche’s resignation but the bulk of the purchases were conducted after May 9th.
P2P lending platform Zopa will finance loans for customers of newly launched online mobiler retailer Unshackled.
Customers can fund the purchase of handsets by taking out a finance deal with Zopa. The APRs on launch will range from 9.7 per cent to 24.9 per cent. Customers will also be able to pay off early at no extra cost or make additional payments.
The partnership is Zopa’s first online retail agreement, with its service integrated in to Unshackled.com sales platform using the Zopa API.
Jaidev Janardana, Zopa CEO added: ‘With the majority of consumers getting a bad deal on their mobile phone, partnering with Unshackled means we can offer consumers better, fairer and more transparent deal in financing their phone.’
Today UK p2p lending service Zopa announced it will extend its product range to offer ‘Zopa Car ReFi‘, a refinancing product for car loans. It is positioned to allow consumers to refinance existing car loans at a better rate. Zopa’s credit risk algorithms, combined with in-depth vehicle information, act together to provide customers with a free and instant personalised savings estimate, prior to those customers taking out the product.
Ownership of the vehicle remains with Zopa’s Lenders until the final payment, when it will be transferred to the borrower.
Jaidev Janardana, Zopa CEO said, ‘We are thrilled to launch the UK’s first seamless car refinancing service, helping thousands of consumers drive down the cost of car ownership. This is a market worth £12bn per year with plenty of space for customer-first innovation – something we have specialised in at Zopa for over 11 years. Buying a car is by far the most common reason for a customer to take a personal loan from Zopa, so we are proud to now also offer a product that can help customers that already have a car on a finance agreement. …’
The quarterly earnings announcement of Lending Club was completely dominated by the circumstances of the resignation of CEO Renaud Laplanche. I add the results for the 1th quarter of 2016 below:
Today’s news that Renaud Laplanche, founder of Lending Club, resigns came as a surprise for me and I think pretty much everybody else in the industry. Renaud Laplanche steered Lending Club from launch to the position it as the largest marketplace lending service for consumer loans in the US.
The board has reportedly asked for his resination after an investigation into a sale of 22 million US$ in loans to an institutional investor that mismatched the investor’s criteria. The loans were subsequently repurchased by Lending Club.
Lending Club conducted a review, under the supervision of a sub-committee of the board of directors and with the assistance of independent outside counsel and other advisors, regarding non-conforming sales to a single, accredited institutional investor of $22Â million of near-prime loans ($15Â million in March and $7Â million in April). The loans in question failed to conform to the investor’s express instructions as to a non-credit and non-pricing element. Certain personnel apparently were aware that the sale did not meet the investor’s criteria.
In early April 2016, Lending Club repurchased these loans at par and subsequently resold them at par to another investor. As a result of the repurchase, as of March 31, 2016, these loans were recorded as secured borrowings on the Company’s balance sheet and were also recorded at fair value. The financial impact of this reporting is that the Company was unable to recognize approximately $150,000 in revenue as of March 31, 2016, related to gains on sales of these loans.
The review began with discovery of a change in the application dates for $3.0Â million of the loans described above, which was promptly remediated. The board also hired an outside expert firm to review all other loans facilitated in the first quarter of 2016 and the firm did not find changes to data in these or other Q1 loans.
The review further discovered another matter unrelated to the sale of the loans, involving a failure to inform the board’s Risk Committee of personal interests held in a third party fund while the Company was contemplating an investment in the same fund. This lack of disclosure had no impact on financial results for the first quarter.
Given the events above, the Company took, and will continue to take, remediation steps to resolve the material weaknesses in internal control over financial reporting identified in the first quarter of 2016 — one related to the sales of non-conforming loans and the other to the failure to disclose the personal investment interests — and to restore the effectiveness of its disclosure controls and procedures. These remediation steps included the termination or resignation of three senior managers involved in the sales of the $22Â million of near-prime loans.
Scott Sanborn will continue in his role of President and will become acting CEO.
The LC stock is currently trading 25% down following the news.
I have written about the partnership between Google and Lending Club earlier. The image below shows an actual advertising message Google is sending to its Adwords customers. Note that a special loan is offered, not a standard Lending Club loan. This partnership is a great match for both Google and Lending Club. Google can enable its customers to get access to the funds they need to grow their business and potentially spend more on advertising services supplied by Google. Lending Club can target selected businesses, which were prescreened based on the data Google has via the Adwords customer relationship.
