Author Topic: What will happen if Lending Club becomes a public company?  (Read 1974 times)

Watermen

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What will happen if Lending Club becomes a public company?
« on: March 03, 2013, 08:39:13 pm »
Just wondering...if it got listed....what is the effect on investors like us?

Zach

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Re: What will happen if Lending Club becomes a public company?
« Reply #1 on: March 03, 2013, 08:58:18 pm »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.
Primary Account Highlights:
Interest Radar IRR: 16.11%
Return Over Deposits: 13.33%
Average Loan Age: 229.5 days
(As of 10/13/2013)

Watermen

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Re: What will happen if Lending Club becomes a public company?
« Reply #2 on: March 03, 2013, 09:01:21 pm »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.

what about the stock price of LC? given the fact that ROI is likely only going to be in the positive range (unless more people default), does it mean the stock price will only go up?

Zach

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Re: What will happen if Lending Club becomes a public company?
« Reply #3 on: March 03, 2013, 09:12:57 pm »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.

what about the stock price of LC? given the fact that ROI is likely only going to be in the positive range (unless more people default), does it mean the stock price will only go up?

I don't think that's anything we can comment on now...They haven't issued an IPO yet.
Primary Account Highlights:
Interest Radar IRR: 16.11%
Return Over Deposits: 13.33%
Average Loan Age: 229.5 days
(As of 10/13/2013)

AnilG

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Re: What will happen if Lending Club becomes a public company?
« Reply #4 on: March 03, 2013, 09:30:43 pm »
Once IPO, LC will not have go through each state to get approval to offer loans to each state's lenders and borrowers.

As the stock price will be influenced by revenues and earnings of Lending Club, LC will most probably focus on things that bring more revenue and reduce costs - bringing more borrowers to the platform, relaxing lending criteria, increasing lending amount, focusing more on institutional investors, expanding in to other unsecured and secured loans, establishing more partnerships with loan originators.

Individual lenders will get the same treatment as retail investors get from stock market and brokerages. Most likely, LC will move individual lenders to third parties to manage.

Just my guess ...

Just wondering...if it got listed....what is the effect on investors like us?
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AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #5 on: March 04, 2013, 11:00:06 am »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.

I've seen this point made before- what's the basis for this statement. Why would LC becoming publicly traded affect the restrictions placed on the debt securities its issuing?

brycemason

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Re: What will happen if Lending Club becomes a public company?
« Reply #6 on: March 04, 2013, 12:32:51 pm »
It's called the Blue-Sky exemption.

http://en.wikipedia.org/wiki/Blue_sky_law

By virtue of a Securities and Exchange Commission (SEC) order in January 1998 that designates NYSE Arca Tier I listed securities as covered securities for the purposes of Section 18(a) of the Securities Act of 1933, Tier I listings are afforded Blue Sky exemption from state securities laws in all 50 states (SEC Release No. 3-7494, January 2, 1998). Under the SEC's order, Section 18(a) preempts any state registration and fee requirements that would otherwise apply to Tier I listings.

Randawl

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Re: What will happen if Lending Club becomes a public company?
« Reply #7 on: March 04, 2013, 12:34:06 pm »
Just wondering...if it got listed....what is the effect on investors like us?

Restrictions by state for both borrowers and investors would be removed (currently, some states prohibit borrowers or investors on the LC platform).

I think that would be the only impact we would see.

I've seen this point made before- what's the basis for this statement. Why would LC becoming publicly traded affect the restrictions placed on the debt securities its issuing?

Because of the Blue Sky Laws which will supersede the current state restrictions.

Cletus

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Re: What will happen if Lending Club becomes a public company?
« Reply #8 on: March 04, 2013, 01:16:45 pm »
I get the feeling that we will see a loss of liquidity via foliofn when LC goes public.  Currently there are quite a few states that do not allow people to invest directly through LC.  My gut tells me when all states are allowed to invest directly that the Foliofn market for notes will dry up.  Just my 2 cents.

AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #9 on: March 04, 2013, 01:33:23 pm »
Right - securities listed on an exchange are not subject to state securities regulation, but that would only relate to LC shares that are traded after the IPO. The debt offering through which we buy notes is separate, and would have to have its own basis for exemption from state regulation no?

I know that you get blue sky preemption for securities that are senior to securities traded on an exchange, but I dont know that that would apply here - the notes should be senior to LC common stock, but stranger things have happened at sea.  But then the notes would have to stay on LCs books no?  If they did an spv for bankruptcy remoteness, then the notes would need their own basis for exemption from state laws no?  Excuse my typos!

brycemason

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Re: What will happen if Lending Club becomes a public company?
« Reply #10 on: March 04, 2013, 02:16:37 pm »
All reasonable questions for which I'm sure there's an acceptable answer. I don't know it, but Peter's gotten this word straight from LC, so I'm sure they've done their DD.

AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #11 on: March 04, 2013, 03:09:43 pm »
All reasonable questions for which I'm sure there's an acceptable answer. I don't know it, but Peter's gotten this word straight from LC, so I'm sure they've done their DD.

It would depend on how good their securities counsel is. LC has a unique structure, so I think that even very good counsel could screw it up.

Peter

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Re: What will happen if Lending Club becomes a public company?
« Reply #12 on: March 04, 2013, 06:21:13 pm »
Now, I am not a securities lawyer so I can't say for sure. But I have been told by the CEO of Lending Club on a number of occasions that the blue sky exemption will allow Lending Club to operate for retail investors in all 50 states. As Bryce says, I am sure they have done their due diligence here and that is indeed correct.
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AmCap

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Re: What will happen if Lending Club becomes a public company?
« Reply #13 on: March 04, 2013, 09:47:47 pm »
Peter, perhaps ask off hand if they've thought how that exemption will apply if they eventually move the notes to a bankruptcy remote SPV.  I'm just curious.


Mullery

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Re: What will happen if Lending Club becomes a public company?
« Reply #14 on: March 05, 2013, 11:36:20 pm »
I get the feeling that we will see a loss of liquidity via foliofn when LC goes public.  Currently there are quite a few states that do not allow people to invest directly through LC.  My gut tells me when all states are allowed to invest directly that the Foliofn market for notes will dry up.  Just my 2 cents.

I agree with Cletus on this.  I wonder if LC will need to address what could become a major liquidity issue once all 50 states are eligible?