Marketplace lending company Funding Circle (LSE:FCH) announced on Wednesday it has completed its first asset-backed securitization (ABS) of US small business loans originated through its platform. According to Funding Circle, a total of $198 million was raised through the securitization, which marks “the debut of Funding Circle’s US securitization sponsorship capability,” as well as it is the fifth securitization of Funding Circle business loans globally.
Funding Circle also reported that the transaction is rated by two ratings agencies, with its senior tranche earning an A- (sf) rating from Kroll Bond Rating Agency and an A3 (sf) rating from Moody’s Investors Service. It was revealed that the oversubscribed transaction saw a demand from 18 institutional investors, ranging from asset managers and private credit funds to insurance companies and sovereign wealth funds.
While sharing more details about the securitization, Bernardo Martinez, Funding Circle U.S. Managing Director, stated:
“Funding Circle’s inaugural US securitization is a major milestone in our journey to build the infrastructure where any institutional investor can efficiently lend to small businesses. With our global securitization program and sponsorship capability, we’re proud to expand access to a traditional fixed income asset class for new types and styles of investors, while also providing diversified funding for small businesses to grow and drive the economy forward.”
The completion of the securitization comes less than two weeks after Funding Circle announced it has lent over $10 billion since launch in 2010. At the time of the announcement, Martinez revealed:
“We are incredibly proud that Funding Circle has become small business’ first choice for loans. We look forward to continuing to build on the strong foundations we have put in place to help many more businesses in the years ahead.”
Funding Circle further explained it has facilitated loans from over 90,000 investors to 72,000 small businesses and it manages a loan portfolio of $3 billion (£2.5 billion) in the UK, $1 billion in the U.S., and an additional $175 million (€156 million) and $129 million (€115 million) in Germany and the Netherlands
Real estate marketplace lender Money360 announced on Monday it has surpassed $1 billion in loans originated and closed since inception. The announcement comes just 11 months after the lending platform revealed it had hit $500 million.
Launched in 2014, Money360 is described as a vertically-integrated, nationwide direct lender that sources, underwrites, closes and services small- to mid-balance commercial real estate loans ranging in size from $3 million to $25 million. While speaking about the latest milestone, Evan Gentry, Founder and CEO of Money360, stated:
“From the beginning, Money360 has been committed to revolutionizing the commercial real estate lending industry. We built the company with a highly seasoned team that possesses exceptional credit experience through all market cycles, and an origination team with deep local market expertise. Our proprietary technology and efficient back office drive a fast, reliable and transparent lending process to create a best-in-class market solution. Our first $1 billion milestone underscores our success in becoming a market leader by providing a more streamlined and client-friendly solution for brokers and property owners to obtain financing, and we expect to hit the second billion in 2019.”
Money360 also reported that over the past few years, the platform has grown its team to nearly 40 staff members, adding personnel to the Midwest, Southwest and Western Regions, enhancing its local market expertise across the U.S. Money360 is notably represented by influential industry leaders on its Board of Advisors, including former Citigroup President John Havens, former President of T. Rowe Price Global Investment Services, Todd Ruppert, and Ron Suber, Prosper Marketplace president Emeritus.
Commercial property investment marketplace CrowdStreet announced on Wednesday it is now raising $25 million for the company’s first CrowdStreet Blended Portfolio investment offering.
The investment platform revealed that in order to provide individual investors and registered investment advisors another way to diversify their investments with commercial real estate, it is planning a series of diversified and specialty portfolio investment options that will collectively raise and invest up to $170 million. Crowdstreet also reported the CrowdStreet Blended Portfolio simplifies investing in commercial real estate and opens the door for more people to access the market with diversification, which minimizes risk. The lender explained:
“The Blended Portfolio is a direct response to identified needs from both existing and prospective investors, as well as registered investment advisors who recommend that clients allocate a portion of their assets to institutional-quality commercial real estate.”
Funds from the Blended Portfolio will be used through 30-50 pre-vetted projects on the CrowdStreet marketplace, which will be representing a broad range of commercial and multifamily asset types, risk profiles and geographies. Speaking about the Blended Portfolio, Tore Steen, CrowdStreet CEO, stated:
“Our new Blended Portfolio brings further simplicity, and investors and their advisors can access a wide range of pre-vetted and sought-after CrowdStreet marketplace offerings without the need to review and invest on an individual property basis. It’s diversification with one click at a low cost.”
Since its launch, more than $8.5 billion of commercial and multifamily properties have been listed on the CrowdStreet marketplace, which makes private equity real estate investing accessible to millions of users. The marketplace added that more than 100,000 investors and more than 250 real estate operators and developers are on its platform.
China Rapid Finance Limited (NYSE: XRF), one of China’s largest consumer lending marketplaces, announced earlier this week the launch of its new share repurchase program, which allows the lender to authorized the repurchase of its ordinary shares in the form of American depositary shares with an aggregate value of up to $20 million.
The lender reported that this approved share repurchase may be effected on the open market at prevailing market prices, depending on a number of factors, including, but not limited to, share price, trading volume and general market conditions, along with China Rapid Finance’s working capital requirements, general business conditions and other factors, as well as subject to applicable rules and regulations, including requirements of Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
Speaking about the program, Dr. Zane Wang, Chief Executive Officer, Founder and Chairman, stated with this share repurchase authorization, the lender’s board is making a strong statement of the company’s future. He added:
“We have more than enough cash to fund our current operations and expect to be operating profitably in the near future. The Board and management team firmly believe that the Company’s current stock market valuation reflects neither the untapped value of our established customer relationships and the business we have built, nor our prospects for future growth.”
The launch of its new repurchase program comes just a little over a month after China Rapid Finance exceeds 20 million cumulative loans facilitated since its lending platform launch. The lender reported that the milestone demonstrates accelerating the growth of its consumer marketplace due to the fact that the number of facilitated loans has nearly doubled within the past six months from 10.7 million cumulative loans as of the end of 2016. The platform also revealed that one a year-over-year basis, second facilitated loans have jumped by over 350% to more than 5 million, up from approximately 1.1 million cumulative loans in the same quarter of last year.
On Tuesday, German marketplace lender for SMEs, creditshelf, announced it is extending the maximum term of its arranged loans from 36 to 60 months. The online lending platform also reported that the maximum loan amount will double from previous €2.5 million to €5 million with loans still remaining unsecured, thus allowing borrowers to have more financial flexibility.
creditshelf reported that by extending the loan amount and maturity, it can now provide further financing opportunities for its clients. Small and medium-sized companies. creditshelf Managing Director, Daniel Bartsch, stated:
“Our clients are still reporting considerable difficulties in convincing their principal banks of their investments, and the financing of smaller corporate takeovers is not always smooth. SMEs, especially in the current phase of technological change and ownership succession, depend on larger financing, which is what we are responding to with our new offer.”
The company also noted:
“For the new loan option with a maximum term of five years, companies pay a monthly repayment. Flexible increases during the term of the loan are possible subject to adequate financial performance. The investors on the platform – professional and institutional investors such as family offices, alternative investment funds or even banks – benefit from a wider range of investment opportunities. For borrowers, the choice means greater flexibility. Loans with a term of twelve months or less may continue to be repaid either monthly or in arrears.”
In regards to what the new year will hold for creditshelf, the lender revealed it expects a total of a three-digit million volume of financing. Bartsch added:
“With the expansion of the loan offer, we are strengthening our position as the digital SME lender in Germany and consistently pursuing our growth course of recent years.”
Current State of Affairs
Small business lender Kabbage announced earlier this month that it would begin selling over $525 million worth of loans to investors, which will in turn increase its lending capacity to over $2.7 billion.
In contrast, Kabbage’s competitor OnDeck, has seen its share price steadily drop since its IPO in 2012 (down close to 80%). And while OnDeck has been able to increase its borrowing capacity by $52 million recently, its Q4 earnings report showing a record loss indicates that things are not looking up.
Kabbage is growing while OnDeck seems to be on a downward trend, and given last years negative analysis of the online lending marketplace, it makes some sense that Kabbage will soon make an offer to buyout OnDeck.
So will Kabbage attempt to buy out OnDeck? Maybe, but the more important question is whether OnDeck will agree to it and at what terms.
Standard vs Reverse Merger
Bloomberg columnist Gillian Tan thinks that OnDeck most likely won’t agree to a standard buyout based on the fact that OnDeck’s earliest investors still own 45% of the company. Given its share price is currently trading at a fraction of its IPO, those investors will likely want a large premium on any offer by Kabbage.
A reverse merger is also very unlikely since Kabbage can’t offer very much cash or equity as a private company to OnDeck’s shareholders.
What Will Happen?
OnDeck did see a slight uptick in its shares last week when speculation of a buyout was first reported on and the recent hiring of former Morgan Stanley COO Jim Rosenthal to its board of directors might be a sign that things will improve. Whether or not Kabbage makes an offer and whether OnDeck accepts remains to be seen.
On Thursday, reporting and analytics platform dv01 announced it is collaborating with Experian to bring transparency to marketplace lending. The companies stated that the collaboration would provide dv01 clients with access to richer borrower credit attributes while they conduct performance analysis using dv01’s online tools. Perry Rahbar, founder and CEO of dv01, stated:
“We’re excited to partner with Experian to bring additional data transparency and actionable intelligence to the marketplace lending ecosystem. dv01 already has a robust set of tools for reporting and analysis, and this new influx of data will allow clients to better understand loan performance by enabling our tools to operate at their maximum potential. The more institutional investors know, the better their decision-making.”
dv01 noted it is in the process of mapping millions of borrower attributes from Experian’s database to installment loans in client portfolios. dv01 is also acting as a data warehouse for select data sets that Experian offers investors for modeling purposes. Alex Lintner, president of Consumer Information Services, Experian, noted:
“Experian’s powerful credit data combined with dv01’s performance data on marketplace loans and portfolios allows institutional investors to surgically analyze risk and value based on borrowers’ credit performance. Borrower data allows investors to evaluate and analyze future performance in a way not previously possible, and this leads to smarter, more profitable decisions.”
dv01 added it has aggregated performance data for more than $40 billion of loans from marketplace lenders including SoFi, Lending Club, Prosper, Marlette Funding, Avant, and CommonBond. To date, it has secured $7.5 million of seed funding from Quantum Strategic Partners Ltd., Leucadia National Corporation, and Pivot Investment Partners.
Smava, the German marketplace lender, has secured a $34M in a funding round led by Runa Capital, with additional participation from the Scandinavian private equity firm Verdane Capital, mojo.capital and existing investors, reported AltFi News. Runs, an active investor in the alternative finance sector, has also invested in Zopa as well as the gateway platforms Lending Robot and Lendio. Smava CEO and Co-Founder Alexander Artopé indicated the $34M will allow the marketplace lender to expand its customer base, hire additional talent and enhance its credit scoring technology.
Runa Capital Partner Andre Bliznyuk and Verdane Capital Partner Henrik Aspen will join smava’s advisory board, according to AltFi News.
Foundedin 2007, Smava is a consumer lending platform which connects borrowers to a broad base of investors, spanning from banks to private investors. In April 2015, Smava raised $16M in equity money in a round which was led by Phenomen Ventures.
DriverUp, an online marketplace for automotive financing, today announced that tech industry veteran Anthony Fratiani has joined its executive team as Chief Technology Officer. In this newly created position, Fratiani will oversee the continued build out of DriverUp’s consumer-facing side of the business.
“We are thrilled about Tony joining DriverUp and bolstering our technology pedigree,” DriverUp Co-Founder and CEO Sam Ellis shared. “Our mission is to establish a new standard of online auto finance for drivers, dealers and investors. Tony shares our vision and has the expertise to realize our objective of legitimately making auto finance a seamless digital experience.”
Fratiani brings 20 years of software development, quality assurance and business operations experience to DriverUp. Prior, he spent most of his career at Match.com, in various key technology roles helping the company transition from an early stage growth story to a global online dating powerhouse. He will oversee the build of DriverUp’s technology team, design and launch new product features, and expand the platform’s mobile functionality and adoption.
“I’m very excited about joining the movement that DriverUp is leading. DriverUp is the solution needed for transforming the auto finance process and I’m ready to apply my experience to elevate the company’s lead in technology innovation,” Fratiani commented.
Last September DriverUp reaped $20 million in a Series B round. Launched by a team of automotive and consumer finance veterans, DriverUp is backed by venture capital firms who led the Series B: RRE Ventures, Emerald Development Managers and SF Capital Group.
DRB, a bank and marketplace lender that has reached $1 billion in student loan refinancings, announced this week that it has closed its fourth securitization. This securitization brings total issuance in excess of $928.2 million. The $332.5 million in senior notes were rated A2 to A3 by Moody’s Corporation and AA by DBRS. The loan portfolio was comprised of 75% fixed and 25% variable loans. Morgan Stanley led this transaction.
In November 2015, DRB closed a $359.0 million transaction, a deal rated BBB+ by Fitch Ratings and A by DBRS comprised of 69% fixed and 31% variable loans. DRB has been providing refinancing options for student loans since 2013 and has originated over $1.3 billion since launching its student loan division.
Aryea Aranoff, Chief Strategy Officer of DRB, stated:
“Since DRB began focusing on student loan refinancing, we have prided ourselves on providing our borrowers with the lowest interest rates, the best customer service and leading technology that would allow them to focus on establishing a strong financial future. Our fourth securitization enables us to continue offering this to our borrowers. In less than two years, we have seen vast growth, and we continue to expand our product offerings as we focus on developing long-term relationships with our borrowers nationwide.”