Online lender Elevate Credit Inc. has postponed its initial public stock offering due to difficult market conditions, reported the Wall Street Journal. The firm was slated to price its initial public stock offering Thursday. Based in Fort Worth, Texas, Elevate Credit makes unsecured personal loans to subprime borrowers. In 2014, Elevate was spun out of Think Finance Inc., a former lender that is now a technology provider to the online-loan industry. Elevate seeks to reinvent the non-prime lending industry by giving consumers access to responsible, competitive and transparent credit options, without hidden or punitive fees.
The WSJ noted that shares of already public online lenders including Lending Club and OnDeck Capital are down more than 25% so far in 2016 after a tough 2015 performance, “well beyond” the 15% decline for the KBW Nasdaq Bank index. Also citing Square, the Journal noted its stock had fallen below its offering price of $9 in volatile trading Wednesday closing at $9.49, down 27.5% this year.
“Elevate Credit’s deal is the latest blow to an IPO market that has been struggling for over a year and could signal further trouble ahead for a long list of other financial- technology and technology companies that raised money privately at high valuations and are weighing 2016 offerings,” commented the WSJ‘s Maureen Farrell and Telis Demos. “Late last year, LoanDepot Inc., a mortgage and online consumer lender, indefinitely postponed its IPO just before it was about to price. Yirendai Ltd., a Chinese online lender, sold shares in December. Its stock is down 29% since its debut. Another firm, BFS Capital Inc., an online small-business lender, said last September it had filed confidentially for an IPO, but it hasn’t yet launched its offering.”
Elevate’s team includes CEO Ken Rees, CFO Chris Lutes and COO Jason Harrison. Further information is not available due to SEC quiet-period regulations. Elevate’s revenue grew by two-thirds over the first nine months of 2015 from a year earlier to $300 million. The company offers loans and lines of credit to non-prime borrowers — Rise, Sunny and Elastic — as well as industry analytics in the U.S. and U.K., targeting the “new middle class.”
Update: Elevate Credit, Inc. clarified this afternoon that due to the volatile market, it has decided to temporarily delay the pricing of its initial public offering.
“Although the response to the marketing of our planned IPO has been very favorable, we recognize that the current market volatility makes it very difficult to price our offering at present,” stated Elevate’s Chief Executive Officer Ken Rees. “We will continue to evaluate the timing for the offering as market conditions develop. We believe our strong growth to date, and our responsible online credit products, make Elevate an exciting opportunity that we look forward to bringing to the market.”