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Controversy just can't seem to leave LendingClub alone. With talks of a potential private takeover by founder and former CEO Renaud Laplanche (following his controversial exit earlier this year), the postponement of Lending Club's annual meeting, the hiking of its rates and its website going down earlier this week (with investors especially concerned as, unlike competitor Prosper, LendingClub does not lend through a bankruptcy remote vehicle), it seems nothing can go its way.
Yet, in a rare reprieve, LendingClub is reported to have been in talks with hedge funds Och-Ziff, Soros Fund Management and Third Point to raise as much as $5b to fund its loans. This is significant considering LendingClub originated $8b in all of last year, and has faced a challenging securitization market.
Analysts say any deal of this sort would go a long way to restoring confidence in LendingClub’s ability to match big buyers of loans with small borrowers. The so-called marketplace model propelled the startup to a huge valuation in its 2014 initial public offering, but it is under pressure following the forced resignation of LendingClub’s chief executive and founder, Renaud Laplanche, last month. LendingClub’s board said Mr. Laplanche oversaw a series of disclosure failures, including a misdating of loans sold to an investment bank, that called into question the firm’s transparency about its loans, which had been a key part of its pitch to buyers.
