Shares in Lending Club, the world’s largest peer-to-peer lender, have surged 56% to $23.43 (£15) per share in their New York Stock Exchange debut.

That values the firm at $8.5bn, indicating strong investor interest in the Lending Club’s micro-loan model.

Lending Club is an online market place that matches investors with those seeking loans.

Chief executive Renaud Laplanche rang the opening bell, and said he thinks the firm is just getting started.

Lending Club, which does not actually lend any money itself but rather connects borrowers and lenders and then takes a fee, saw its revenue leap from $1.3m in 2009 to $98m in 2013.

The firm says it has financed more than $6.2bn worth of loans since its founding.

Booming business

The marketplace for peer-to-peer lenders has boomed in recent years, as low interest rates and a tight financing environment has spurred investment.

Fitch Ratings estimated that peer-to-peer lenders originated somewhere between $4bn to $5bn in loans last year.

Lending Club rival OnDeck Capital is also scheduled to go public soon, capitalising on enthusiasm for the model among investors.

However, analysts and industry watchers question the long-term viability of the model, noting that firms like Lending Club have benefitted from a low interest rate environment and a relatively welcoming regulatory climate.

But for now, Lending Club, and other firms like it, remain attractive to big players – and even smaller investors.

Adam Goldsmith, a former finance worker now pursuing a graduate degree, says most of his investments are now with Lending Club.

“It’s really easy to use,” he told the BBC.

“I believe in it because it’s a new spin that allows individual investors to access a mature market that was usually open only to banks.”

 

Source: BBC – The shares of the world’s largest peer-to-peer lender

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