LendingClub Plans to Become a Bank With $185 Million Radius Buy
LendingClub Plans to Become a Bank With $185 Million Radius Buy
(Bloomberg) -- LendingClub Corp. got its start replacing old-school bankers with machines that match borrowers and investors. Almost 15 years later, it’s planning to become a bank itself.
The online credit marketplace is buying Radius Bancorp in a cash-and-stock transaction valued at $185 million, according to a statement Tuesday. The acquisition of Radius, which has $1.4 billion in assets, will give LendingClub greater regulatory clarity and a less-expensive form of funding for its loans, the San Francisco-based company said.
“This is a transformational transaction that allows us to re-imagine banking in a way that is free from legacy practices and systems,” LendingClub Chief Executive Officer Scott Sanborn said in the statement.
LendingClub is the latest financial technology company to seek a bank charter, which allows firms to take deposits directly from consumers and use them to fund loans. Varo Money Inc., an online bank, has received approval from the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency as part of its own pursuit of a charter, and On Deck Capital Inc. has said it will spend about $5 million this year to seek a charter.
Shares of LendingClub fell 2% to $12.90 at 5:29 p.m. in late trading in New York. LendingClub said after the close of regular trading Tuesday that it expects full-year revenue to be between $790 million and $820 million, compared with the $868 million average of nine analysts in a Bloomberg survey.
LendingClub said it expects the deal, which is subject to regulatory approval, to close within 12 to 15 months. The transaction is likely to be accretive within two years, the company said.
“This is a perfect marriage, with LendingClub bringing the leading digital asset-generation platform, and Radius contributing a leading online deposit-gathering platform, to position the combined company for long-term success,” Radius CEO Mike Butler said in the statement.
JPMorgan Chase & Co. served as a financial adviser to LendingClub, while Sullivan & Cromwell LLP provided legal counsel. Broadhaven Capital Partners LLC and Piper Sandler Cos. advised Radius, while Hogan Lovells helped on legal matters.
To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Dan Reichl
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