After a rough several weeks, Lending Club shares surged on two pieces of news today. A regulatory filing revealed today that an Asian investment firm has taken a sizable stake in the embattled online lender, and Reuters reported on Friday that Lending Club has hired Jefferies to look for loan funding. The company’s stock climbed by more than 10% to as high as $4.42 on Monday after plunging earlier this month as news of problems piled up.
Shanda Group invests in Lending Club
A filing with the U.S. Securities and Exchange Commission revealed today that Shanda Group has taken an 11.7% stake, which includes options to buy more shares, in Lending Club. The private investment firm, which is based in Singapore, amassed its position of 44.7 million shares by purchasing them in large chunks between March and April.
It should be noted that the timing of some of those purchases was before the disclosure of allegations of a lack of disclosure about a potential conflict of interest and the incorrect placement of some loans. Some of the investment also came before CEO Renaud Laplanche resigned amid all the problems and last week’s revelation that the online lender had received a subpoena from the Department of Justice.
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However, Shanda management still likes Lending Club. According to The Wall Street Journal, they said in a statement that they remain “a strong believer” in the company’s business model and that they are still “positive on its long-term prospects as it continues to evolve and refine its business.” The Journal cites an unnamed source as saying that the firm’s stake is passive, although Lending Club said in a statement that it has spoken with the investment firm and that it anticipates “continued dialogue.”
Lending Club said to hire Jefferies
Reuters reported on Friday that the online lender hired Jefferies LLC to help it locate investors to help with funding loans, citing unnamed sources. It said earlier this month that investors had begun to pause purchases of loans on its platform following the disclosure about an incorrect placement of loans. An internal investigation revealed that some documents relating to the sale of $22 million in loans to one investor had been falsified. Reuters’ sources reportedly said this investor was Jefferies.
The media outlet also reported that Lending Club has now hired Jefferies to contact other possible investors to directly sell loans, including firms that manage alternative assets like Apollo Global and Fortress Investment. Reuters also said it’s unclear which investors might participate, although Citigroup told regulators in a memo recently that it had rejected Jefferies’ request to support the online lending club.
Lending Club released a statement last week saying that some current and potential new investors had approached it about making bulk loan purchases. Reuters’ sources said investors who take part in the plan will likely demand some sort of discount and that bulk loan purchasers will be offered warrants for Lending Club shares.