The Position of Lending Club at IPO

wiseclerk

The long announced IPO of marketplace lender Lending Club is imminent now, with the first day of trading expected to be around Dec. 10th.

Lending Club will issue 57.7 million new shares priced in the range of 10 to 12 US$. On the upper end this means the company will have a valuation of around 4.4 billion US$. At the same time existing shareholders will offer 7.7 million new share for sale.
Lending Club did not forget it roots. At the begin of the astonishing growth curve it were the small retail investors that funded all the Lending Club loans. So now Lending Club has reserved 10% of the new shares and offered them to these retail investors through a ‘Directed Share Programs’ via Fidelity Investments. For each investor a certain amount of shares (mostly 350) was reserved and offered.

Aside from the IPO financials the big news is the strong position Lending Club has built in the p2p lending market:


Source of all images: Lending Club

Lending Club showed strong growth every quarter.

Continue reading →

Decision Trees – Using The Available Data to Identify Lending Opportunities on Bondora – Part 1

Guest 1 Comment

This is a guest post by British Bondora investor ‘ParisinGOC’.

Introduction

Financial institutions across the world have many ways of assessing whether a loan is worth making.  A simple search on the web reveals that many use Data Mining.  More specifically, “Decision Trees” are a particular tool within Data Mining that has been analysed and I quickly found at least 2 papers (Mining Interesting Rules in Bank Loans Data and Assessing Loan Risks: A Data Mining Case Study) amongst many pointing in this direction.

Having had some experience of Data Mining in a financial environment, I believed I could use these same techniques in my own P2P lending which, after over 12 months activity, I felt could be improved.

In this document, I explore the use of the freely available Data Mining Software “RapidMiner” and its Decision Tree capabilities when applied to the data available to investors from Bondora, a peer-to-peer (P2P) lending site.

Bondora

Bondora is a P2P lending site based in Estonia that “unites investors and borrowers from all corners of the world”, allowing investors to invest funds to satisfy advertised borrowing needs.

Fundamentally, Bondora also provides comprehensive data to investors, allowing detailed data downloads of the individual loans held by the investor, as well as data on every application made to Bondora (originally known as Isepankur) since the first application on 21st February, 2009.

It is the complete Bondora data set that I have used as the raw data for analysis as it is the best data available to find out which potential borrowers are the right match to the potential lenders.  Only if enough lenders feel that a loan application is worth investing in will the loan be fulfilled.  Self-selection is taking place in both elements of the loan fulfilment and this data is the result of that interaction.

Also shown in this data are some elements of loan performance post-drawdown.  Crucially, it shows those loans that subsequently defaulted (failed to make any payments for a period in excess of 60 days).  Although Bondora will chase the debt on behalf of the investor and have a track record of some success, there is no guarantee that the investment, or any part of it, will be returned.

Decision Trees

www.investopedia.com/terms/d/decision-tree.asp states: A schematic tree-shaped diagram used to determine a course of action or show a statistical probability.

In this case, I am using the data provided by Bondora on all its previous applications to reveal how the resulting loans that share similar characteristics have performed.

Specifically, I am using this data to show the percentage of those previous loans that have defaulted and using this to indicate how a similar, new application may perform should the application succeed in attracting enough investors.

In other words, I am using past performance data to show how future investments may perform – I feel sure I have seen this phrase somewhere before! Continue reading →

International P2P Lending Services – Loan Volumes November 2014

wiseclerk 1 Comment

November was a month of mixed results for the listed p2p lending services. Some grew, some had a small decline in newly originated loan volume this month. Ratesetter crossed a total volume of 400 million GBP originated since inception. Ablrate profited from the deal with the first institutional investor, which boosted volume. I added one more service.  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.


Table: P2P Lending Volumes in November 2014. 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:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Lending Club Valuation at IPO 4.33B Max.

wiseclerk

For the coming Lending Club IPO a recent SEC filing reveals details on the valuation of the company.

LendingClub Corporation is offering 50,000,000 shares of its common stock and the selling stockholders are offering 7,700,000 shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares of common stock. We anticipate that the initial public offering price will be between $10.00 and $12.00 per share.

After the IPO there will be 361,111,491 shares of common stock outstanding at Lending Club so at 12 US$ per share this will result in a 4.33 US$ billion valuation. Read more details on Lend Academy.

Growth of Bondora Resale Market

wiseclerk

This post is based on the findings, which German investor ‘Bandit55555’ posted in his own blog p2p-anlage.de. ‘Bandit55555’ is the investor at Bondora with the highest ROI (at least that I am aware of): He calculates his XIRR ROI to be 35.4%, while Bondora displays 57.5% for his portfolio. He achieves that by very diligently using the public download data supplied by Bondora as a basis for his investing and trading. In fact he even developed his own scoring system based on the data.

The secondary market of p2p lending marketplace Bondora was introduced in March 2013. Right now more than 24,400 loan parts are on sale. Using the data Bondora makes publicly available for download the following charts were created.


Number of loans sold on Bondora’s secondary market. Source p2p-anlage.de, reproduced here with permission. Continue reading →

P2P Lending in Poland and a Portrait of Kokos.pl

Guest

This is a guest post by Krystyna Mitręga-Niestrój, University of Economics in Katowice, Poland

P2P lending develops quickly in the world in recent years. The platform Kokos.pl was the beginner at social lending in Poland in February 2008. The following portals began to operate shortly thereafter: Finansowo.pl, Monetto.pl (both in March 2008, however Monetto is not operating any more) and Smava.pl (equivalent to German Smava.de platform). During the first four years of the Polish p2p lending market the value of loans was estimated at PLN 130 million (approx. USD 43 million). It consisted only a small number comparing to the value of consumer loans granted by banks – more than PLN 127 billion (approx. USD 42 billion), as of February 2012. Almost half of this amount (PLN 61 million, approx. USD 20 million) was borrowed through the platform Kokos.pl, which so far has more than 180 thousand users. After five years (situation at the beginning of 2013) from launching the first p2p platform approx. half a million the Polish residents borrowed approx. PLN 250 million (USD 58.5 million) (5 lat pożyczek społecznościowych, 2013). The owners of the p2p platforms earn money mainly on fees charged for transactions. It should be noted, that the information about the p2p lending market in Poland is limited and current, comprehensive data are lacking.

The most important players on the Polish social lending market are: Kokos.pl (with almost 80% share in invested funds through p2p lending platforms), Finansowo, Sekrata, Pożycz, SzybkoiPewnie, Bilonko, Zakra (Zestaw Narzędzi Pożyczkodawcy, 2013). The situation on p2p lending market in Poland is dynamic, however there is more positive tendencies associated with entering of the new players on the market, than the bankruptcies of the p2p platforms. The two examples of the latter are the collapse of Monetto.pl and Ducatto.pl. The Polish peer-to-peer lending market seems to be interesting for foreign p2p platforms (for instance the entrance of Swedish TrustBuddy in 2013).
Taking under consideration the information from the largest p2p platform Kokos.pl (the data include the 5 years period, from the launching of the platform) we can state that the statistical investor and borrower came from Masovian Voivodeship (is the largest, the most populous and the wealthiest voivodeship in Poland), are on average 34 and 33 years old. The statistical borrower borrows on average PLN 2,026 (USD 1.500) for 11 instalments. The average salary is equal to PLN 2,723 (approx. USD 2000).

At the beginning when first p2p lending platforms have launched a great part of Polish society was skeptical about such form of investing and borrowing. The threat of fraud and bankruptcies of p2p platforms hampered the development. However, thanks to changes and refining methods of verification the p2p platforms have became safer. The popularity of social lending is growing steadily in Poland. This trend is, among others, influenced by more attractive offer and promotions of p2p lending platforms. Continue reading →