September 18, 2017 – It was an extremely active week in the Alternative Lending space.  Goldman Sachs agreed to buy $300 million of loans from Mosaic and multiple sources reported that they hired approximately 20 employees away from the small business lender, Bond Street, in an effort to launch a small business lending offering themselves.  Goldman Sachs believes lending will be the biggest driver of net revenue growth in years to come, with its President, Harvey Schwartz, describing direct lending as a $2 Billion annual revenue opportunity by 2020.   It was also reported that Goldman will expand their new online retail banking offerings to the U.K.

Mike Cagney resigned as CEO of SoFi and stepped down from the Board.  Despite the negative headlines SoFi’s growth engine continues produce in record numbers. In Q2 2017 alone, SoFi funded $3.1 billion in loans with $134 million in revenue and $61.6 million in adjusted EBITDA. Revenue and adjusted EBITDA were up 67% and 60% year over year respectively.  SoFi priced its latest personal loan securitization (SCLP 2017-5) this week with strong initial interest, however the bonds priced slightly wider than guidance given the news this week.

Atlanta-based real estate crowdfunding platform, Groundfloor, announced that it entered into a whole loan purchase relationship with Direct Access Capital, a specialty finance company that focuses on providing liquidity to non-bank lenders. They are targeting $100 million in loans through 2018. It was also reported that Lima One Capital, a lender for residential real estate, bought the residential lending business of RealtyShares. This will allow RealtyShares to focus on its commercial and multifamily real estate lending business.  RealtyShares is also raising a $28 million Series C round led by Cross Creek Advisors, with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures.

Finally, Kroll Bond Rating Agency assigned preliminary ratings to three classes of notes to be issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (“CLUB 2017-P1”). This is a $363 million consumer loan ABS transaction by LendingClub Corporation that is expected to price this week.  

Opinions expressed within the commentary are general opinions of Chris Lalli and Jae Lim and are not opinions of CapAccel or SF Sentry Securities, Inc. Nothing in this commentary should be viewed as solicitation to buy or sell specific securities or a recommendation to participate in any transactions. Securities offered through SF Sentry Securities, Inc., member FINRA/SIPC.

Sources:  Orchard Platform, PeeriQ