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#TrustBuddy: Strong demand for #Lending Club #IPO, $LC

TrustBuddyLogoLendingClub, biggest peer to Sweden listed P2P lending provider TrustBuddy, has raised about USD 865.5 million from selling 57.7 million shares in its IPO. Stock is expected to start trading today, Thursday December 11th.

The initial public offering of LendingClub, the world’s largest online marketplace directly connecting borrowers and investors, was priced at USD 15 per share, above its expected price range of USD 12- USD 14, underwriters said. The IPO raised about USD 865.5 million from selling 57.7 million shares, valuing the company at about USD 5.4 billion. The company plans to use the proceeds from the IPO for repayment of debt and general corporate purpose

Quarterly revenue increased at LendingClub during the year. The company reported net revenue of $56 million on $7.4 million net loss in the quarter ended Sept. 30. The revenue is higher than in the quarter ended March 31, just prior to the last investment round, when revenue was $38.7 million on net loss of $7.3 million. For the 12 months ended September 30, 2014 LendingClub booked $177 million in sales.

Lending Club will be the second P2P lending provider to be listed on a stock exchange. The pioneer has been Sweden listed TrustBuddy, which has recently announced two strategically important acquisitions. The acquisitions allow TrustBuddy to expand into SME loans (corporate loans) and long-term consumer credit. Furthermore, the acquisitions contribute to the further geographic expansion of TrustBuddy, which is growing all over Europe.

The valuation of the Lending Club IPO brutally shows just how undervalued TrustBuddy is in comparison, since the European counterpart is trading at significantly lower multiples. At a valuation of USD 5.4bn, Lending Club will be trading at 30.5x 12-months trailing revenues. Looking at the same timeframe, i.e. 12 months ended September 30, 2014, TrustBuddy reported revenues of SEK 106.4m. TrustBuddy’s current market cap is around SEK 400m. This implies a multiple of 3.8x. If we were to assign the same multiple to TrustBuddy as to Lending Club, TrustBuddy’s market cap should be SEK 3245m, or SEK 9.80 share. This would imply an upside of 7.8x compared to today’s levels. Probably that is one of the reasons why insiders have been heavily buying shares ever since the summer.

Nordic Investor

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