Direct Lending Platform to IPO

The marketplace lending space in Canada is growing and gaining traction and now a direct lender is looking to float.

Mogo Finance Technology Inc. is expected to launch an IPO offering as early as this month. This could value the online lender at about C$200 million (US$166.4 million).  

The company is aiming to raise about C$50 million from the float and would list on the Toronto Stock Exchange. Mogo allows customers to apply for online loans of up to C$25,000 for terms ranging between one and five years. For its long term loans, interest rates range between 6.9% and 35.9% depending on a customer’s credit score. Mogo also offers a prepaid Visa Card that customers can reload.  

We have covered the development of direct lenders in the US. It seems that with the rise of peer-to-peer lending more investors are turning to direct lending as a similar asset. This is shown by the launch of the Ranger Direct Lending Fund, which shunned peer-to-peer lending in order to focus exclusively on direct lending platforms. The fund said that it would be focusing on direct lending as these platforms offered a higher yield and more diversification than most marketplace lenders.

The rise of the alternative finance market in Canada has been dampened by the domination of the lending industry by the four big banks. The float and the success of a direct lender in Canada is important for the marketplace lending industry as it shows that people are willing and open to using an alternative to the banks. That attitude should trickle down and help the marketplace lending platforms to boost their origination volumes.