The Lending Club IPO: A First Hand Account at the NYSE

IMG_1489
Lending Club banners outside the New York Stock Exchange on IPO day

When I first started writing about this industry in 2010 I did it because I loved the concept and believed in its potential. Back then I was pretty much alone in that thinking.

But earlier today many thousands of investors around this country decided that they also believed in this industry’s potential as they bought equity in Lending Club in the first IPO this industry has ever seen.  It was an historic and groundbreaking day.

When Lending Club sent me an email early last week inviting me to their IPO celebration today on the floor of the New York Stock Exchange I didn’t hesitate. I wanted to be there and was honored that they included me.

So, this morning I arrived at the NYSE at 8am. There were dozens of people milling about outside admiring the huge Lending Club banner including a who’s who of the P2P lending industry. All the invited guests, numbering probably 100 or so, then headed inside where we were all presented with a bright red Lending Club jacket.

At the New York Stock Exchange breakfast with Lending Club CEO Renaud Laplanche
At the New York Stock Exchange breakfast with Lending Club CEO Renaud Laplanche

Then it was upstairs for a sit-down breakfast where we heard speeches from Renaud as well as Lending Club board members John Mack (the former CEO of Morgan Stanley) and Jeff Crowe of Norwest Venture Partners (they invested in Lending Club’s Series A back in 2007). We also heard some brief remarks from Larry Summers (the former Treasury Secretary) who patched in remotely.

After breakfast we all went down to the NYSE trading floor to await the opening bell. There were people with red jackets everywhere. And that doesn’t include the dozens of Lending Club employees who made the trip and were looking down from the balcony.

Ringing the Opening Bell

The Lending Club executive team ring the opening bell of the New York Stock Exchange
The Lending Club executive team ring the opening bell of the New York Stock Exchange

Just before 9:30am EST Renaud and the Lending Club team went up to ring the opening bell of the New York Stock Exchange. This was a big moment and received a huge roar from the crowd.

Then we waited. We were told that trading would open around 10am. While Lending Club (ticker: LC) didn’t open at 10am that was when we got our first indication of where it would begin trading. The first indication was an open in the $17 – $20 range but that was quickly replaced by an indication of $20-$22, then $22 – $24 and finally $23 – $25. Keep in mind that the underwriters set the IPO price on Wednesday night of $15/share.  This was quite a bump in price.

This being my first time on the floor of the New York Stock Exchange for an IPO I was fascinated to see how much human involvement there was in this process. The trader at the “Lending Club post” would yell out the latest price indication and the number of shares for sale every couple of minutes and the traders around us would be on their phones talking with clients and making notations on their tablets.

Finally, Lending Club began trading as Renaud rang the small bell at the trading post. The first trade at 10:40am EST was at $24.75 and the stock quickly popped higher to over $25 before settling in to a range of between $23 and $24 where it stayed all day.

With Lending Club COO Scott Sanborn after Lending Club opened for trading
With Lending Club COO Scott Sanborn after Lending Club opened for trading

The Retail Investor Share Purchase Program

Around 20 minutes later we were all ushered off the trading floor, where many of us left somewhat reluctantly. It was a stunning morning and I, for one, was not ready to leave. It was an incredible experience witnessing an IPO first hand, the first one I have ever had a vested interest in.

Speaking of a vested interest, I participated in Lending Club’s Directed Share Program through Fidelity that was available for Lending Club retail investors. I had requested the maximum of 350 shares but, like most people, only received 250 shares. I intend to hold these shares for a very long time. I would like to commend Lending Club for their inclusion of their retail investors in this program – for many of us it was the first time we had ever been able to participate in an IPO.

When the NYSE closing bell rang this afternoon Lending Club’s shares were priced at $23.43. This was up $8.43 or 56% on the IPO price. Lending Club had raised around $870 million and the company was valued at $8.46 billion. According to Bloomberg this puts Lending Club’s market cap higher than all but 13 U.S. banks.

The Lend Academy Contest

Back in June when it became apparent that Lending Club was likely to have their IPO sometime in 2014 I decided to run a fun little contest. I asked Lend Academy readers to guess what valuation that Lending Club would be priced at and what day the IPO would happen.

We have our winners. Long time Lend Academy reader, Randawl, guessed the IPO would happen on December 10 – he was off by only one day. Congratulations! Not bad for a guess made back in June. On the valuation front, Lending Club was priced at $5.4 billion and while no one guessed that number, we had two people guess $5.5 billion. So, congratulations to Raymond and Tim who are both winners. You will all be contacted via email in the coming days to receive your prizes – which is Lending Club branded gear.

Final Thoughts on the IPO

There will never be another day like today. Lending Club has broken new ground today and gained the attention of the financial world with a very successful IPO. No one knows what lies ahead, particularly what the stock price will do from here. But today the P2P lending industry, or as I should say now, the marketplace lending industry, grew up.

As Larry Summers said in his remarks this morning today marks the end of the beginning. Now, we will see the true potential that Lending Club has to change the world. With almost $1 billion in their coffers now that potential is vast.

To see more photos of the day check out Luc Hardy’s Flickr page. Luc was an investor in the Lending Club seed round back in 2006. You can also watch Renaud’s CNBC interview here.