LendingClub Corp., the largest U.S. peer-to-peer lender, received a $57 million investment from Yuri Milner’s DST Global and Coatue Management LLC as the company nears an initial public offering.
The transaction values LendingClub at $2.3 billion, said two people with knowledge of the deal, who asked not to be identified because the valuation is private. LendingClub Chief Executive Officer Renaud Laplanche said the share sale closed yesterday and consisted entirely of stock purchased from early backers.
The San Francisco-based company is spearheading a surge in online consumer lending, by letting individuals and institutions provide credit to other people in return for yields that are more than three times higher than 10-year Treasuries. LendingClub’s valuation has jumped 48 percent since Google Inc. led a $125 million secondary purchase in May, which valued the company at $1.55 billion.
LendingClub “uniquely combines the scalability and efficiency of online marketplaces with a large addressable market,” Milner wrote in an e-mail. He didn’t comment on the company’s valuation and Katherine Madariaga, a spokeswoman for LendingClub, also declined to comment on valuation.
Loans facilitated by LendingClub for everything from debt consolidation to home remodeling more than doubled to $567 million in the third quarter from a year earlier, Laplanche said.
At its new valuation, LendingClub is among the highest-priced private technology companies now that Twitter Inc. (TWTR:US) is publicly traded. Startups worth more than $2 billion include file storage provider Dropbox Inc., room-sharing service Airbnb Inc. and online billboard Pinterest Inc.
DST, founded by Russian billionaire Milner, has also invested in Facebook Inc. (FB:US), Twitter, Zynga Inc., Groupon Inc. and Airbnb.
Laplanche, who started LendingClub in 2006, is weighing 2014 for an IPO. While some early investors are cashing in some of their stake, employees are holding, he said. He didn’t say which investors sold in the round. Early backers include Canaan Partners, Norwest Venture Partners and Morgenthaler Ventures.
“There’s an expectation we’ll go public next year, and we feel we have a lot of visibility into the business,” Laplanche said in an interview.
LendingClub competes in peer-to-peer lending with Prosper Marketplace Inc., which raised $25 million in September from Sequoia Capital and BlackRock Inc. Prosper, also based in San Francisco, said last month that originations in October climbed to $50 million, an increase of 500 percent from January.
Both companies make money primarily from fees associated with issuing loans. LendingClub’s third-quarter revenue almost tripled to $28 million from a year earlier, Laplanche said. Prosper generated revenue of $3.41 million in the second quarter, the most recent period that it’s reported.
The loans of as much as $35,000 are often used as an alternative to high-priced credit cards. Instead of turning to banks, consumers are receiving online funds from other people and institutions, who are acting as investors.
LendingClub said that from June 2007 to mid-2013, lenders earned an average annualized return of 9.5 percent. The yield on 10-year Treasuries is currently 2.77 percent.
Separately, LendingClub said Jeff Huber, a Google executive, and Michael Barr, a law professor at the University of Michigan and former Treasury Department official, joined the company’s advisory board.
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