Google Inc (NASDAQ:GOOG) has acquired a minority stake in a company that provides a common platform to persons who require cash and persons who have cash to loan it out.
The search giant and another investor, Foundation Capital, purchased shares from existing investors for a stake into loan-pairing company Lending Club. The loan pairing company announced the investment by Google today, but it made no mention of the amount invested by the search engine giant. However, Lending Club did reveal that the investment is part of a $125 million round of financing.
Lending Club, founded in 2007, has been an impressive performer. According to the company, over $1.65 billion of personal loans have been exchanged through its network, which includes $350 million in the last quarter. The company focuses on only “high-credit-quality borrowers.”
A Lending Club borrower generally has an average FICO credit score of about 706 and the average loan amount is about $13,076. The peer to peer loan firm claims that loans through its platform are low cost, with an average annual percentage rate of about 6.78 percent compared to a national average of 9.06 percent.
As per the latest round of investment, Lending club is valued at $1.55 billion, which is three times the valuation of the previous fund raising.
The internet firm will acquire less than 7 percent stake in the Lending Club, and David Lawee, vice president for corporate development, who led the talks for the investment, will be appointed as an observer on the loan pairing firm’s board.
Still, there are no clear signals on why Google acquired a stake in a company that is not related to its operations. However, Google did issue a statement saying it is excited to be a part of the loan services company.
Google Inc (NASDAQ:GOOG) has invested in many start-ups directly and through its investment arm but does not have much experience with a financial firm. Google Inc (NASDAQ:GOOG) Wallet, a mobile payments system, is the closest the company has come in terms of finance or banking related investments.
Lending Club CEO Renaud Laplanche said that a partnership with Google will help the company to serve customers better.
“We’re really excited about partnering with Google,” Renaud Laplanche, Lending Club’s chief executive, said. “We’re trying to be the good guys of finance and banking, and Google Inc (NASDAQ:GOOG) has a reputation of being the good guys of technology.”
The partnership with Google Inc (NASDAQ:GOOG) is certainly a positive sign for Lending Club, even more so considering a possible initial public offering next year.