Troubled Online Lender Seeks Financing -- WSJ
May 27 2016 - 3:02AM
Dow Jones News
By Telis Demos and Peter Rudegeair
LendingClub Corp. is in talks with Citigroup Inc. about the New
York bank buying or providing financing for future loans made by
the online platform, people familiar with the discussions said.
The talks show one way that LendingClub is seeking to reassure
its existing investors while finding new commitments from them to
buy loans following the forced resignation of its chief executive,
Renaud Laplanche. The resignation came after LendingClub's board
discovered that employees had falsified data on some loans sold to
an investment bank, Jefferies.
"We are productively engaged with LendingClub on a number of
fronts," a spokeswoman for Citigroup said.
Citigroup and LendingClub announced a separate agreement last
year in which the New York banking giant would buy loans from the
platform to help it meet community lending requirements.
The bank also was a big buyer until earlier this year of the
loans from rival online lender Prosper Marketplace Inc. That
relationship broke down after the Citigroup sale of those loans in
a securitization bond priced poorly, The Wall Street Journal
previously reported.
LendingClub also has been working with two banks that were part
of securitization deals that stalled when Mr. Laplanche left.
LendingClub and its lawyers are discussing commitments with funds
that already buy loans; Jefferies is advising on that process, the
people said.
The Journal reported earlier this month that Goldman Sachs Group
Inc., which also was involved with a LendingClub securitization,
had been working with the firm to help it determine the best way to
access capital markets in the wake of Mr. Laplanche's resignation
announcement. LendingClub has been exploring its options for the
securitization deal, including private loan sales to outside
investors, in the event that buyers would be interested.
Meanwhile, rival Prosper is fielding inquiries from large
investors and private-equity firms that are seeking to buy loans,
according to people familiar with the discussions. The firm is
working with bankers at boutique advisory firm Financial Technology
Partners and J.P. Morgan Chase & Co. to advise on the
discussions, the people said. Reuters reported the involvement of
the two banks earlier.
Prosper executives also are presenting loan performance
information to investors, the people said.
Said Aaron Vermut, Prosper chief executive: "We're having some
productive conversations with potential loan buyers."
"Prosper is talking to banks solely for the purpose of helping
us coordinate and work with investors who are interested in buying
loans on our platform," said Mr. Vermut.
Write to Telis Demos at telis.demos@wsj.com and Peter Rudegeair
at Peter.Rudegeair@wsj.com
(END) Dow Jones Newswires
May 27, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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