Rumour mill churns in US online lending sector

By Ryan Weeks on Monday 7 August 2017

Alternative Lending

Whispers abound of a major financing round, an acquisition and an IPO within the US online lending space.

All eyes will be on LendingClub later today, with the company’s earnings call scheduled for this afternoon. But LendingClub is one of the few major US online lenders to have steered cleared of swirling industry speculation towards the end of last week.

Perhaps chief among the rumours was the suggestion that SoFi may at last be on the brink of an IPO that was first mooted by CEO Mike Cagney in 2014. The Wall Street Journal reported last week that Cagney had “hinted” that SoFi is moving closer to an IPO, after posting record earnings and loan volumes in the second quarter.

Meanwhile, SoftBank continued to build on its portfolio-for-the-future with a $250m equity investment in small business lending fintech Kabbage. Kabbage is both a software-as-a-service provider to major banks and a lender in its own right. Rumours began earlier this year that Kabbage was considering a bid to acquire rival business lending platform OnDeck, which has seen its valuation cut considerably since listing on the New York Stock Exchange in 2014. An article in The Financial Times last week suggested that the SoftBank investment could give kabbage “the firepower for a potential takeover” of OnDeck.

Last but not least came the rumour that Prosper Marketplace is sizing up a significant down-round that could slash its valuation by about two-thirds. A piece suggested that the consumer lender is considering a funding round that would drop its valuation to around $550m. Prosper was said to be valued at around $1.9bn as recently as 2015, when it raised $165m in a round led by Credit Suisse NEXT Investors.

So there you have it: whispers pertaining to more or less every major online lender in the US (bar one). LendingClub’s earnings call is set for later today, 17:00 Eastern Time. You can tune in here.

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