By Heather Somerville
San Jose Mercury News.
SAN FRANCISCO
Lending Club on Thursday became the first online peer-to-peer lending startup to trade publicly and California’s largest initial public offering of the year, immediately jumping 65 percent on its Wall Street debut and marking a bellwether event for the fledgling Internet loan industry.
Lending Club charged onto the New York Stock Exchange at $24.75 per share, a $9.75 per-share increase from the price set the night before, a surge that helped calm the stock market one day after a deep slide. Shares closed at $23.43, up $8.43, according to The Associated Press.
Lending Club sold 57.7 million shares and raised at least $865.5 million in the much-anticipated debut, becoming the largest initial public offering from California this year, and just a few years after the startup was panned by critics as a subversive loan company looking to scam people.
At the opening trading price, Lending Club’s market value reached $8.9 billion.
After a rough Wednesday with deep dives on the stock market, Lending Club joined other stocks in strong gains Thursday morning, with the Dow Jones industrial average making triple-digit advances and erasing most of the previous day’s losses.
The startup joined an unusually busy December for public offerings and the record IPO class of 2014, becoming the 18th-largest of more than 264 deals in the U.S. this year, according to market-intelligence firm Ipreo.
Lending Club founder and chief executive Renaud Laplanche has said he didn’t take the company public only to raise capital; instead, he wanted to become a public company to gain national exposure and attract more consumers outside his tech-savvy hometown.
Lending Club is an Internet marketplace that connects lenders with people who need money, using Web tools to provide an instant risk assessment of the person asking for money. Much in the way eBay connects buyers and sellers, Lending Club is a marketplace where lenders and borrowers connect online, rather than making loans directly. It has facilitated $6.2 billion in loans since 2007.
In an interview with CNBC on Thursday, Laplanche said he would use some of the IPO earnings to acquire other financial tech startups, and has ambitions to expand internationally.
Laplanche owns roughly 4 percent of the company, and although he isn’t expected to sell shares in the IPO, after Thursday his stake will be worth $204.7 million, according to research firm Equilar.
With its public debut, Lending Club carries the hopes of an emerging and increasingly crowded sector that aims to upend the traditional banking industry by making personal and business loans quicker and easier, and sometimes cheaper, by using the Internet.
“You can actually go online and get a loan, and it is easier, it is faster and it is cheaper, and you can do it from your living room,” said Jason van den Brand, co-founder and chief executive of Lenda, a San Francisco-based Internet startup that offers home mortgage refinancing. “It presents an opportunity for massive disruption for the status quo.”
Lenda is one of dozens of online lending startups that have been watching Lending Club’s IPO, hoping the deal will validate the fledgling business model and silence naysayers who argue that such services are risky. Another potential boon for the sector is OnDeck Capital, a New York-based online lender that facilitates small business loans, which is expected to begin trading Wednesday and raise $180 million.
