IPO Report: LendingClub (LC)

Francis Gaskins  |

LendingClub (LC) Based in San Francisco, CA,LendingClub (LC) is the world’s largest online marketplace connecting borrowers and investors. It is based in San Francisco, CA,

Nine other companies are scheduled to IPO for the week of Dec. 8, 2014.  The full IPO calendar is available at IPOpremium.

Manager, Joint-managers: Morgan Stanley, Goldman Sachs, Credit Suisse, Citi
Co-managers: Allen & Company, Stifel, BMO Capital Markets, William Blair, Wells Fargo Securities

LC scheduled a $635 million IPO with a market capitalization of $4 billion at a price range midpoint of $11 for Thursday, December 11, 2014 on NYSE.  Price range mid-point increased to $13.  No change in recommendation.  SEC Documents

LendingClub IPO Summary

LC is the world’s largest online marketplace connecting borrowers and investors.


Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs*

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Sept 9 mos


LendingClub (LC)








*adjusted for stock comp


LC IPO Conclusion

Neutral plus

Rev +122%

Operating income +176%

Barely profitable adjusting for stock compensation

Price-to-sales of 21, definitely in the high range

Price-to-book of 6.1

Lending Club's Business

LC is the world’s largest online marketplace connecting borrowers and investors.

LC’s marketplace has facilitated over $6 billion in loan originations since it first launched in 2007, of which approximately $1.8 billion were invested in through notes issued pursuant to the Note Registration Statement, $2.5 billion were invested in through certificates issued by the Trust and $1.7 billion were invested in through whole loan sales.

In the third quarter of 2014, LC’s marketplace facilitated nearly $1.2 billion in loan originations, of which approximately $0.2 billion were invested in through notes issued pursuant to the Note Registration Statement, $0.3 billion were invested in through certificates issued by the Trust and $0.5 billion were invested in through whole loan sales.

LC believe a technology-powered online marketplace is a more efficient mechanism to allocate capital between borrowers and investors than the traditional banking system.

Consumers and small business owners borrow through Lending Club to lower the cost of their credit and enjoy a better experience than traditional bank lending.

Investors use Lending Club to earn attractive risk-adjusted returns from an asset class that has generally been closed to many investors and only available on a limited basis to institutional investors.

Trusted Brand

LC has built a trusted brand with a track record of delivering exceptional value and satisfaction to both borrowers and investors.

Key advantages LC has relative to traditional banks include:

an innovative marketplace model that efficiently connects the supply and demand of capital;

online operations that substantially reduce the need for physical infrastructure and improve convenience; and

automation that increases efficiency, reduces manual processes and improves borrower and investor experience.

Cost Advantages

For consumers and small business borrowers, LC leverages its cost advantages and marketplace model to provide borrowers with affordable credit.

LC utilizes its technology to provide a better experience, offering borrowers a convenient, simple and fast online application that improves the often time-consuming and frustrating loan application process.

LC designs its products to be fair, transparent and borrower-friendly.

All of the installment loans offered through LC’s marketplace feature fixed rates, fixed monthly payments, no hidden fees and no prepayment penalties.

Intellectual Property

LC relies on a combination of copyright, trade secret and other rights, as well as confidentiality procedures and contractual provisions to protect its proprietary technology, processes and other intellectual property.

Although the protection afforded by copyright, trade secret and trademark law, written agreements and common law may provide some advantages, LC believes that the following factors help it to maintain a competitive advantage: technological skills and focus on innovation of LC’s software development team and other team members across the organization; frequent enhancements to its platform; and borrower and investor satisfaction.

LendingClub Competition

LC competes with financial products and companies that attract borrowers, investors or both.

With respect to borrowers, LC primarily competes with traditional financial institutions, such as banks, credit unions, credit card issuers and other consumer finance companies.

LC believes its innovative marketplace model, online delivery and process automation enable it to operate more efficiently and with more competitive rates and higher borrower satisfaction than these competitors.

With respect to investors, LC primarily competes with other investment vehicles and asset classes, such as equities, bonds and short-term fixed income securities. LC believes that its diverse and customizable investment options give it the flexibility to offer attractive risk-adjusted returns that are uncorrelated with other asset classes.

LC competes with other online credit marketplaces, such as Prosper Marketplace, Inc. and Funding Circle Limited. LC is the world’s largest online marketplace connecting borrowers to investors, which it believes provides LC with a major competitive advantage. LC believes that its network effects and marketplace dynamics at play make it more attractive and efficient to both borrowers and investors.

LC anticipates that more established internet, technology and financial services companies that possess large, existing customer bases, substantial financial resources and established distribution channels may enter the market in the future.

LC believes that its brand, scale, network effect, historical data and performance record provides it with significant competitive advantages over current and future competitors.

5% Shareholders Pre-IPO

Jeffrey Crowe   16.3%

Rebecca Lynn      9.2% 


No dividends are planned.

Use of Proceeds

LC expects to receive $512 million from its IPO and use it for the following:

to use the net proceeds to it from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures.

LC also expects to use a portion of the net proceeds to it to repay in full the indebtedness outstanding under its term loan with several lenders led by Morgan Stanley Senior Funding, Inc., which LC entered into to fund a portion of the cash purchase price of Springstone.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
LC LendingClub Corporation 3.53 -0.03 -0.84 1,209,065 Trade


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