The SFIG Vegas conference set an attendance record this year, mirroring improved investor sentiment amidst an improving economic backdrop. Several participants drew comparisons to the 2004 environment which also featured a rising rate environment, deregulatory agenda, and conditions leading to an acceleration in ABS volumes.
Fed Chair Janet Yellen signaled a rate increase for March FOMC committee. Fed officials expect a total of three rate hikes this year (75 bps total). Fed futures peg the probability of a March rate hike at over 80%. Originators are expected to raise interest rates on borrowers by a similar amount to maintain net interest margin and cover higher funding costs borne by aggregators.
Financings continue apace. Upstart announced a $32.5 Mn raise and sees an additional opportunity to help banks, credit unions, and retailers originate loans using their SAAS technology. This represents a continuation of the “capital light” theme (see Avant & Regions Bank, or OnDeck and JP Morgan for instance). In a much anticipated deal, Prosper announced a $5 Bn deal across a consortium of investors including affiliates of Third Point, Fortress unit New Residential Mortgage, and Soros Fund Management.
On the regulatory front, the US District Court of the Southern District of New York issued a decision in Madden v. Midland on remand. The court granted certiorari enabling a class action against Midland to proceed. In an unfortunate setback for lenders and investors, the court rejected the “choice of law” provision in relation to NY residents. The upshot is that the decision preserves the status quo of regulatory uncertainty, and increases the need for congressional action to overturn the Second Circuit’s Madden decision.
For those focused on deal-making at SFIG, we put together a summary of our impressions and takeaways based on dozens of conversations with industry leaders.
This week, several members of the PeerIQ leadership team will be attending LendIt where PeerIQ is nominated for the “Top Service Provider” Award. PeerIQ CEO, Ram Ahluwalia, will give a keynote address on Monday at 10:20AM on the role of securitization in marketplace lending.
Feel free to contact us if you’d like to schedule a meeting.
- LendIt on March 6-7 in New York. Save 15% on your ticket by using PeerIQ’s VIP code: PEERIQ17USA.
CEO, Ram Ahluwalia will deliver a keynote address, “Why Securitization and Online Lending are So Important for Each Other,” on March 6 at 10:20AM.
- PeerIQ will also serve as a judge at the LendIt Awards Ceremony for “Most Innovative Bank” and “Top Consumer Lending Platform.” PeerIQ is nominated for the “Top Service Provider” Award.
- 2017 Security Traders Association of New York Capital Market Conference and Dinner on March 30 in New York.
PeerIQ the News:
- PeerIQ Forms Partnership with 1010data on Loan Data from Online Lenders (Crowdfundinsider, 2/27/17)
- PeerIQ Partners with 1010data to Offer Hosted Normalized Online Lending Data (BusinessWire), Rated: AAA (Lending Times, 2/28/17)
- PeerIQ Announces New Partnership with 1010data (LendIt, 2/27/17)
- Online Lenders to Tap Wider Range of Funds in 2017 (Global Capital, 2/28/17)
- Valuation Methodology – Context Summits Alternative Lending 2017 (ContextTV, 3/3/17) PeerIQ CEO, Ram Ahluwalia, co-leads a panel on valuation with Duff & Phelps.
- Fed Officials Indicate Rate Increase is Likely in March (WSJ, 3/5/17) Officials are guiding expectations to a total of 3 rate hikes.
- Prosper Inks $5 Billion Loan-Buying Deal With Investors Including Soros, Jefferies (WSJ, 2/27/17) Participants expect Prosper to introduce an ABS program on behalf of the consortium.
- SoFi Pursues New Mortgage Niche (AB Alert, 3/3/17) SoFi is considering an expansion of its mortgage-lending business to include higher-income borrowers whose accounts don’t meet the CFPB’s “qualified-mortgage” standards.
- Reg AB Frustrating SEC Staffers (AB Alert, 3/3/17) SEC enforcement personnel are quietly pushing for changes to Regulation AB.
- JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours (Bloomberg, 2/28/17) Leading banks are re-conceiving themselves as data & technology companies.
- US District Court Weighs In on Madden v. Midland Funding Remand (National Law Review, 3/3/17) A district judge certifies the class action lawsuit that continues to hinder regulatory clarity.
- Millennial Lender Upstart Just Raised $32.5 Million to License its Tech to Other Companies (TechCrunch, 3/3/17) Upstart introduces a capital light enterprise SAAS model for credit unions and banks.
- This Is Now the Third-Longest Economic Expansion in U.S. History (WSJ, 3/1/17) Only the expansions of the 1990s and 1960s were longer.
- Amazon’s $150 Million Typo Is a Lightning Rod for a Big Cloud Problem (MITTechnologyReview, 3/3/17) A botched command inadvertently took down swaths of the Web.