A maelstrom of headlines surrounding the resignation of Lending Club CEO Renaud Laplanche dominated this week’s headlines.
Other news included the US Treasury report, “Opportunities and Challenges in Online Marketplace Lending” and Jamie Dimon’s comments on the virtues and funding challenges for marketplace lending.
Investor Reactions
Over the past week, we have fielded 50+ conversations with institutional investors and platforms. Views tend to split across investor type. We attempt to summarize these disparate views in the table below.
Going Slow to Move Fast
Institutional participation in marketplace lending is still a relatively recent phenomenon.
The dry nuts and bolts, plumbing, and data projects that may have historically taken a backseat to new product initiatives are coming to the fore.
Over the next 12 months, we see platforms deemphasizing growth and instead competing to build investor trust via transparency, independence, and enhanced disclosure.
Looking past the negative headlines, the core investment thesis for purchasing marketplace lending loans remain intact. Online lenders are expanding credit to historically underserved segments and generating attractive loss-adjusted returns for investors in the process.
Conferences:
- CEO, Ram Ahluwalia, will join a panel discussion entitled, “Alternative Lending Securitization and Similar Capital Sources,” on June 9th in New York—RSVP here.
- PeerIQ will speak at SCI’s 2nd Annual Marketplace Lending Securitisation Seminar on June 28 in New York.
- PeerIQ will be in Miami for the ABS East Conference in Miami September 16-18.
Industry Update:
- Opportunities and Challenges in Online Marketplace Lending (US Fed, 5/10/16) UST suggests transparency into ABS, standard reps and warrants, consistent reporting, and market-based pricing and valuation standards.
- Marketplace Lending: Bruised, Not Buried (American Banker, 5/10/16) The ability to purchase fractionalized securitized loans with the granularity and transparency that marketplace lending platforms offer is a significant differentiator that, over time, will ensure the growth of the industry.
- Lending Club, a Story Stock that Skimped on Details (NY Times, 5/13/16) Need for enhanced disclosure and transparency to re-build investor trust.
- Blackstone Is Pulling the Plug on Online Consumer Loans (Bloomberg, 5/12/16)
- Lenders Get Burned Betting on Ivy Leaguers (WSJ, 5/8/16) Ivy Leaguers are proving to be savvier and more anti-debt than anticipated.
PeerIQ Mentions:
- Membership Revoked (Economist, 5/14/16) Future investors will expect more in the way of disclosure, asset reviews, and independent evaluations.
- Lending Club Looks to Cope With Challenge (Financial Times, 5/8/16) After a period of frenzied growth, industry experiences slow down due to funding challenges.
- More Thoughts on the Lending Club News Plus a Review of Their Q1 Results (Lend Academy, 5/9/16) Industry leaders share their views on the news surrounding Lending Club and what it means for the industry.
- As Trouble Piles Up, Online Lenders Pull Back (LA Times, 5/9/16) Recent headlines detail challenges in MPL industry.