December 11, 2014 / 3:54 PM / 3 years ago

Loan platform operator LendingClub's shares soar in debut

Renaud Laplanche, Founder and CEO of Lending Club, rings a ceremonial bell to begin trading during the company's IPO on the floor of the New York Stock Exchange December 11, 2014.Brendan McDermid

(Reuters) - Shares of LendingClub Corp (LC.N), the world's biggest online marketplace connecting borrowers and lenders, soared in their debut as investors bet on the potential of online platforms to take on the risky lending that banks increasingly want to avoid.

LendingClub's shares rose as much as 67 percent to $25.44 on the New York Stock Exchange on Thursday, valuing the San Francisco-based company at more than $9 billion.

Investors see LendingClub as a technology company more than consumer finance company, and this is reflected in its high valuation, Equities.com research director Francis Gaskins said.

Traditional banks have been hurt by the high underwriting and servicing costs of lending to small businesses, creating an opportunity for companies such as LendingClub and OnDeck Capital, which is expected to make its market debut next week.

LendingClub charges a fee to match borrowers, including students and real estate investors, with institutional and retail investors and takes no credit risk.

Individuals can borrow up to $35,000, while small businesses can borrow up to $100,000 through its platform (www.lendingclub.com/).

The company is headed by Renaud Laplanche, a former head of product management for Oracle Corp (ORCL.N). Former U.S. Treasury Secretary Larry Summers and former Morgan Stanley (MS.N) CEO John Mack are on its board.

LendingClub says it has facilitated more than $6 billion in loans and paid about $596 million in interest to investors since its launch in 2007.

The company's stock was the most heavily traded on the NYSE, with 13.7 million shares changing hands by early afternoon.

"It underlines a big demand not only for financial technology but also for consumer finance," said Joseph Schusterm, founder of IPO research firm IPOX Schuster LLC.

The IPO raised $870 million after being priced at $15 per share, above the expected range of $12-$14.

The company reaped about 87 percent of the proceeds.

Venture capital firm Foundation Capital has forecast that about $1 trillion in loans will be originated globally in the peer-to-peer lending market by 2025. (bit.ly/1rZre4S)

Investors include Norwest Venture Partners, Foundation Capital LP, Morgenthaler Venture Partners and Canaan LP.

LendingClub reported net loss of $23.9 million for the nine months ended Sept. 30, compared with a profit of $4.4 million a year earlier. Revenue more than doubled to $143 million.

Morgan Stanley, Goldman Sachs and Citigroup were underwriters to the IPO.

Reporting by Neha Dimri in Bengaluru; Editing by Saumyadeb Chakrabarty and Ted Kerr

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