LendingClub climbs after Singapore-based investors boost holdings

A group of four companies controlled by Chen Tianqiao, including Shanda Media Ltd, holds 29 million shares of LendingClub and 15.7 million options.
A group of four companies controlled by Chen Tianqiao, including Shanda Media Ltd, holds 29 million shares of LendingClub and 15.7 million options.PHOTO: ST FILE

NEW YORK/SEATTLE (BLOOMBERG) - LendingClub Corp, the online loan pioneer working to shore up investor confidence since the surprise resignation of its chief executive officer on May 9, climbed in New York trading after a Singapore-based investor disclosed a stake of as much as 11.7 per cent.

LendingClub shares closed 8.3 per cent higher at US$4.32 each on Monday (May 23), paring losses for the year to 61 per cent.

A group of four companies controlled by Chen Tianqiao, including Shanda Media Ltd, holds 29 million shares of LendingClub and 15.7 million options, according to a regulatory filing on Monday from Mr Chen and the firms he controls. They paid US$148.7 million for the shares, including commissions, and an additional US$11.2 million for the options, according to the filing. If the options are exercised, Mr Chen's group would be LendingClub's largest shareholder, according to data compiled by Bloomberg.

"We are a strong believer in the innovative business model LendingClub has pioneered and we are positive on its long-term prospects," the Shanda group said in an e-mailed statement. "We look forward to supporting LendingClub's efforts to strengthen its competitive advantages and continue leading the development of the industry."

LendingClub stunned shareholders May 9 by announcing Renaud Laplanche, 45, its founder and CEO, had resigned after internal reviews. The board cited two incidents: The firm's staff altered application dates on US$3 million of loans before their sale, and Mr Laplanche failed to disclose his interests in a fund that LendingClub invested in.

The disclosures sent shock waves through the online lending world, which has struggled in recent months with a slowdown in investor demand for the debts it produces. Mr Laplanche had been one of the leading voices for a new crop of financial services companies, having built LendingClub into one of the dominant players in his industry over the past decade.

When the San Francisco-based firm and its competitors were founded, they called their business peer-to-peer lending. The idea was that they would connect borrowers with people who wanted to make a little extra money by lending out their savings, cutting out the middleman: banks.

But as the industry has grown, hedge funds, asset managers and even banks themselves have replaced individuals as the main funders of the loans. That backing helped the industry arrange more than US$36 billion in debt last year, compared with US$11 billion in 2014.

Some of those investors have temporarily paused buying loans from LendingClub since Mr Laplanche's exit, forcing the company to seek out new investors. The firm is working with Jefferies Group to line up buyers of its debts, a person familiar with the matter who asked not to be identified discussing internal matters said Friday.

The Shanda group said its investment in LendingClub was consistent with an overall strategy of backing "industries with a large-scale and long-term, sustainable growth potential, and in particular, pioneers and leaders of innovative business models within these industries."

In the filing, the group said it may discuss the company's business, operations, corporate governance or future plans with LendingClub's board, management and investors. Shanda also added that it may hire legal and financial advisers to help the company and could evaluate "strategic alternatives" that arise.

LendingClub said in a statement that it's pleased the Shanda group was increasing its investment and highlighted the investor's "impressive track record identifying disruptive companies in industries including technology and finance." "We view its actions as an endorsement of the long-term prospects and value of our business model," LendingClub said.