First, let me say this is not an April Fools joke. This announcement from Lending Club today is very big news and it is real. Lending Club has just closed on their first acquisition and it is not an online lender – they are buying a traditional lender called Springstone Financial for $140 million in a cash and stock deal.
Springstone Financial, not to be confused with Springleaf Financial, is a consumer lender based in Massachusetts, just outside of Boston. They have two divisions: a patient financing business that provides loans for people seeking elective medical and dental procedures as well as a tuition financing business for K-12 private school education.
Lending Club Raises a New $65 Million Round at a $3.76 Billion Valuation
Despite all their recent success Lending Club does not have $140 million in cash sitting on their balance sheet so they needed to raise more capital to finance this transaction.
Part of this financing was a $65 million equity capital raise from T. Rowe Price Associates, Inc., Wellington Management Company, LLP, BlackRock and Sands Capital. While Lending Club did not share their valuation for this raise it is not difficult to work out from their 8-K filing. Lending Club is now valued at nearly $3.8 billion (up from $2.3 billion just last November).
This $65 million equity round only got Lending Club part of the way there. They also took on $50 million in debt financing and the remainder of the deal ($25 million) was paid for in Lending Club stock. Which basically means no cash whatsoever came off Lending Club’s balance sheet to finance this deal.