Today Lending Club announced that Peter Thomson, chairman of Thomvest and Director of the Thomson Reuters Corporation has made another $25 million investment. This is on top of the $25 million that he made back in September last year.
Like many retail investors Thomson decided to get his feet wet (if you can call investing $25 million that) with Lending Club by focusing on the most conservative loans initially. LC Advisors, the investment arm of Lending Club, runs two funds: the Conservative Consumer Credit Fund (CCF) which invests in just A and B grade loans and the Broad-Based Consumer Credit Fund (BBF) which invests in all loan grades. Thomson’s first $25 million went into the conservative fund and this $25 million will go into the broad based fund.
A year ago this would have been really big news. I almost didn’t write about this because a $25 million investment just doesn’t seem that big a deal anymore. Regardless, it is good to know that the big investors are happy with their performance and continue to put new money to work at Lending Club. With $50 million invested it is safe to say the Thomson will likely be Lending Club’s largest investor.
You can read the full press release here.
I wonder how long it’ll take to get all that into loans and how much per loan is being invested. I’ve only gone above $25 accidentially, and it’s taken me quite a while to get it all invested based on my selection criteria. Granted, the CCF will do all the work, vs hand picking.
Jacob, That is a good question and I am guessing they will invest the $25 million over a 2-3 month period. Lending Club has placed pretty serious restrictions on their LC Advisor arm and how they invest. My understanding is they cannot invest in a loan until it has been on the platform for 7 days to give retail investors a chance. There is no information as to their average investment per loan but I am guessing it is in the $6k – $8k range. But they have a diversified portfolio of 16,000 loans (from the press release) so they are well diversified.
And it is like an index fund, they invest in every loan based on the loan grade allocations they have set.
Goodness! I wonder how that will affect the returns of the small investors like me. $50 million is about 30,000 times the size of my investment in P2P lending. That much money has *got* to drive down the interest rates we can get — without reducing risk at all.
Howard, As I said above there are strict limits on the LC Advisor investments in order to prevent the exact scenario you suggest here. The interest things is that rates have actually climbed a little over the last 12 months as LC Advisors have put $100 million or more into Lending Club notes.
I welcome this. It is a huge vote of confidence.
The broad based fund could invest 25MM over a few months. There are 50MM in loans each month, but they won’t buy up 100% shares and I suspect they don’t allocate evenly across grade, it will take a number of months to deploy it, but not too many,
I look at it this way. In the three months ending June 30th LC issued $137 million in new loans. In the next three months they should issue over $160 million. Obviously, they are growing their investor base but when viewed in this light it doesn’t seem that difficult to include this additional $25 million in that $160 million number.
I wish they’d hurry up and purchase my overpriced notes on FolioFn already.