dorset
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Post by dorset on Jan 12, 2017 14:34:07 GMT
FC's latest fund raising round at £100m now values the company at over $1billion making it a new UK fintech unicorn. Today's Times suggests an IPO in 2019.
What does it mean for lenders? IMO the only plus is that it gives a higher degree of platform stability going forward. On the downside FC will have to seriously crank up their growth rate using more competitive borrower rates (achieved by fiddling with risk grading) and/or relaxing borrower screening criteria. Result lower net returns for lenders?
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pip
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Post by pip on Jan 12, 2017 15:29:04 GMT
One issue (from the point of view of the company) of an IPO is that it puts a lot more scrutiny on the company.
If a share price fell 50%, then investors may run for the hills. When a company is private it's harder to smell when things are taking a downturn, as results are very delayed and Directors will always tell an upbeat story until they pull the plug.
You saw it with Lending Club, a rather opaque breach that led to the CEO resigning, meant a shareprice drop and subsequent loss of investor confidence and lending volumes.
For investors it also depends how the deal is structured. If the IPO is used in part to raise more equity to improve the balance sheet, then I think this would be a good thing. If it's just a chance for the founders to cash in then probably not.
It's not even unknown of for companies to take on loads of debt, pay it all out in dividends and then do an IPO!
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am
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Post by am on Jan 12, 2017 17:13:03 GMT
FC's latest fund raising round at £100m now values the company at over $1billion making it a new UK fintech unicorn. Today's Times suggests an IPO in 2019. What does it mean for lenders? IMO the only plus is that it gives a higher degree of platform stability going forward. On the downside FC will have to seriously crank up their growth rate using more competitive borrower rates (achieved by fiddling with risk grading) and/or relaxing borrower screening criteria. Result lower net returns for lenders? They raised £100m less than two years ago. Do anyone know off hand why they need more funding already? (A few million will have gone in underwriting property loans, unless they've sold them off on the secondary market since. Am I underestimating the costs of US/EU expansion?)
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SteveT
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Post by SteveT on Jan 12, 2017 19:48:13 GMT
What does it mean for lenders? a risk they might start taking us for granted, launching ever more dubious loans at ever lower rates, failing to provide background information, check the financials or even answer reasonable lender questions? No, silly me. That could never be a sustainable business model. Could it?
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Post by GSV3MIaC on Jan 12, 2017 20:13:45 GMT
/mod hat off
Ah, but you can fool all of the autobiddies some of the people, all of the time!!
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blender
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Post by blender on Jan 12, 2017 22:53:55 GMT
I do not think FC will be underwriting any property loans. They will have gone during the ipad frenzy, and there have been no more FC top-ups since. It was limited to £1M total anyway.
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