Chinese billionaire buys 11.7% of Lending Club

Lending Club's stock had fallen over 40 per cent since the resignation of the CEO Mr Laplanche (above) was announced on May 9, after an internal probe found that the firm had knowingly sold US$22 million (S$30.4 million) of loans that the buyer did n
Lending Club's stock had fallen over 40 per cent since the resignation of the CEO Mr Laplanche (above) was announced on May 9, after an internal probe found that the firm had knowingly sold US$22 million (S$30.4 million) of loans that the buyer did not want.PHOTO: AGENCE FRANCE-PRESSE

NEW YORK • Chinese billionaire Chen Tianqiao has bought a nearly 12 per cent stake in Lending Club Corp, as the largest United States marketplace lender seeks funding after a botched sale of loans spooked some of its biggest investors.

Singapore-based private investment group Shanda Group, led by Mr Chen, on Monday said it saw the online lender's battered stock as an attractive buying opportunity.

Lending Club shares closed 8.3 per cent higher at US$4.32 each on Monday, paring losses for the year to 61 per cent. The stock had fallen over 40 per cent since the May 9 announcement of chief executive Renaud Laplanche's resignation, after an internal investigation found that the company had knowingly sold US$22 million (S$30.4 million) of loans that the buyer did not want.

The sale of the 11.7 per cent stake comes as growth in Lending Club's loan originations is slowing and regulatory interest in the sector is increasing. The US Treasury Department this month called for greater scrutiny of online lending and the New York State Department of Financial Services is probing Lending Club's business practices, according to a source familiar with the matter.

"We have been in discussions with Shanda regarding its investment and we look forward to a continued dialogue with it," said a Lending Club spokesman.

Shanda said in a statement: "We are a strong believer in the innovative business model Lending Club has pioneered and we are positive on its long-term prospects."

POSITIVE ON PROSPECTS

We are a strong believer in the innovative business model Lending Club has pioneered and we are positive on its long-term prospects.

SHANDA GROUP, a Singapore-based private investment group led by Chinese billionaire Chen Tianqiao.

Shanda bought a total of about 29 million Lending Club shares for US$148.7 million. It also has call options to buy 15.7 million shares for US$11.2 million.

It has invested in other US financial service firms. Last month, it bought a 10 per cent stake in asset manager Legg Mason from activist fund Trian Fund Management.

Lending Club is by far the largest of the marketplace lenders, which sell their consumer and small-business loans on to investors.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on May 25, 2016, with the headline 'Chinese billionaire buys 11.7% of Lending Club'. Print Edition | Subscribe