With worldwide rates continuing to stay low investors continue to look at alternative fixed income assets to earn larger returns. Online lending platforms offer a stable environment for higher yielding products and three large investors have made big plays in the last year.

Credigy, a U.S. subsidiary of National Bank of Canada struck a $1.3bn purchase program with Lending Club. Aegon, Dutch provider of life and annuity insurance products, will invest $1.7bn in loans issued by the German based Auxmoney platform. NewOak, New York-based asset management and institutional advisory firm, partnered with Canadian platform LendingArch to purchase up to $2bn in consumer loans.

Now, those three commitments represent the largest investment commitments to date coming from one firm but by far the largest commitment of all is the $5bn consortium deal for Prosper loans. Here several firms have combined to form a new entity that has been buying Prosper loans for several months. The firms are Jefferies Group LLC, Third Point LLC, Soros Fund Management and New Residential Investment Corp.

These large deals have given the online lending industry a big boost after recent turmoil and the nature of the assets allows for investors to see results fairly quickly. The trend of these sizable allocations shows that the consumer space is in a strong position to provide investors with the type of yield they are more accustomed to seeing.

These platform CEOs all say that big investors like these firms allow them to diversify their funding sources and create a more stable environment. This also helps to create more credibility to the fintech industry in general. One of the bigger barriers to entry that fintech companies have seen is that asset allocators like pension funds, insurance companies and family offices don’t have enough knowledge to be willing to allocate some of their alternative investment capital. [Read more…]