Prosper Marketplace is in the midst of exploring strategic options, having hired investment banks JPMorgan and Financial Technology Partners and having disclosed it is considering selling equity in the firm.
Reuters reported that the privately held U.S. online lender is mulling the equity raise because, in part, the firm needs to tap markets to raise more money and strengthen balance sheet holdings. Specifically, the capital would improve funding sources.
Equity sales could run the gamut between minority and majority stakes.
As has been noted widely in the financial press, the industry itself has been buffeted by news that has been enough to make investors shy away from buying loans. Of course, the biggest event to make shockwaves through the sector in recent weeks was the CEO of Lending Club stepping down amid findings of falsified documentation covering loans.
The amount that Prosper was rumored to be seeking was $150 million — before the findings of the Lending Club falsifications became clear. Now, the amount that the company is seeking is not known, said the newswire. Prosper has also said that it would raise rates on its loans, targeting higher-risk borrowers, and this is the second rate hike thus far this year. Separately, the company raised rates in August. The company also shed a quarter of its staff earlier this year amid a quarter that saw loan volumes slip by 10 percent year over year.