P2P lending platform Lending Club seems set to launch its IPO in May/June this year, according to a recent article on Wall Street Journal’s website (http://blogs.wsj.com/venturecapital/2014/01/27/lendingclub-checks-off-items-on-ipo-readiness-list/). Lending Club will be the second P2P lender to be publicly listed, following Sweden’s Trustbuddy. The move is expected to greatly increase the public awareness of P2P lending and should be very positive for the segment. The Lending Club listing will also become an interesting benchmark for the valuation of Trustbuddy.
According to Wall Street Journal, Lending Club is currently looking for a vice president of investor relations. The open position is just one of the items on its IPO readiness list that it created about a year ago.
“There were about 50 items on the list, it was a pretty comprehensive list, spanning areas from internal controls to marketing, legal, and accounting, identifying all the things we neglected to do,” said Renaud Laplanche, founder and chief executive of the company, to Wall Street Journal.
“The target date for being ready [to go public] is May or June of this year,” said the CEO, adding that timing for an IPO would depend on market conditions. The company hasn’t yet hired bankers, he said.
“We’ll be hiring a person to manage investor relations in the next few months,” Mr. Laplanche said.
LendingClub, which started operations in 2007, allows consumers to obtain loans at typically lower rates than they get from banks and credit card companies. Loans are offered to groups of investors who crowdfund the deal online. Lending Club keeps costs low in part by conducting its operations online.
The idea behind an IPO for Lending Club is not so much to raise capital as to make more consumers aware of the company’s services. “A public offering would be another opportunity…to raise the visibility, drive awareness and credibility of the company,” Mr. Laplanche said.
The company was valued at $2.3 billion in the latest transaction of its shares, when DST Global and Coatue Management LLC invested $57 million in a secondary deal in October, Mr. Laplanche said. The company also added Google Inc. as an investor earlier last year, also through a secondary deal. LendingClub’s largest investor is Norwest Venture Partners, the CEO said.
Financially, Lending Club has many of the attributes that enabled others to go public. It closed 2013 with revenue of about $98 million, Mr. Laplanche said. For the nine months ended Sept. 30, 2013, it had net income of $4.5 million on $65.5 million in revenue in audited results.
The company operates in a huge market of consumer lending and is planning to start offering small-business loans this quarter. More than $2.1 billion in loans were issued on its platform last year, the CEO said, up from $750 million in 2012.
To better prepare for being a public company, LendingClub has tripled the size of its finance team, which improved its financial controls and financial planning, said Mr. Laplanche. The company also hired Deloitte, a Big Four accounting firm, as its auditor. It also started going through the exercise of preparing quarterly results and communicating them. The company has long been filing 10-Q forms with the Securities and Exchange Commission.