The Wall Street Journal (http://online.wsj.com/articles/lending-club-files-for-initial-public-offering-1409166093) reports that several web-based lenders are planning for IPOs. This would be on top of the P2P lending provider Lending Club, which filed for an initial public offering on Wednesday, a deal that’s likely to be closely watched as online nonbank lenders continue to gain market share from traditional banks.
The number of shares and price range is yet to be determined, the San Francisco company said in a filing with the Securities and Exchange Commission. Lending Club was valued at nearly $4 billion in a fundraising earlier this year but could seek a higher valuation in the IPO, people familiar with the matter said in June.
The company said its initial fundraising target is $500 million, though that figure is likely to change. It said it may use a portion of the IPO proceeds to repay a term loan it used to fund an acquisition earlier this year.
Lending Club primarily collects money from outside investors and lends it to individuals, a practice known as “peer-to-peer” lending. It recently began funding loans to small businesses.
Other web-based lenders are expected to follow in Lending Club’s footsteps, according to Wall Street Journal. OnDeck Capital Inc., an online lender to small business, is preparing to file for an IPO that could value the business at roughly $1.5 billion, The Wall Street Journal reported earlier this month. Executives from Kabbage Inc., another small-business lender, earlier this year indicated an IPO may be on the agenda in 2015.
Online nonbank lenders have seen their share of business and personal loans rise as big banks have scaled back lending due in part to regulatory pressure. Some borrowers unable to get traditional bank loans have turned to online lenders.
The most recent equity round values Lending Club at USD 3.76 billion, according to calculations by the Financial Times, a more than doubling of the company’s valuation since the company raised money from Google a year ago.
A disclosure indicated that Lending Club continues to record strong growth and has tipped into profitability. Lending Club earned USD 98 million in net revenue in 2013, and a net profit of USD 7.3 million. Springstone, that filing shows, generated USD 17.3 million in net revenue and a profit of USD 8.6 million last year. This means that the implied valuation of the recent equity round on a 12-months trailing basis is 33 x revenues (combined LendingClub plus Springstone).
Applying the LendingClub multiple on Sweden listed P2P lending provider TrustBuddy would imply a share price of around SEK 8.15, compared with the current SEK 1.60.
There seems to be significant upside potential in the TrustBuddy share and we believe that the LendingClub IPO could be one potential trigger in the near- to mid-term.