Lending Club – and the alternative lending industry overall – has lost a lot of support in just a few short weeks following the sudden departure of the firm’s CEO, allegations of mismanaged investments and talk by the U.S. Treasury Department about the need for heightened regulation in the space.
But while investors pull back and stock prices slump, there is at least one backer ready to show its support for alternative finance – and for Lending Club itself.
Reports in The Wall Street Journal said Monday (May 23) that investment firm Shanda Group has acquired an 11.7 percent stake in Lending Club. The Singapore-based firm revealed its acquisition in a regulatory filing, reports said.
Lending Club saw its shares increase by as much as 14 percent following disclosure of the deal.
While the purchase of the shares are a much-needed show of support for the company, whose CEO Renaud Laplanche was forced to resign earlier this month, Shanda reportedly began building up its stake in Lending Club before Laplanche’s exit. Purchases of its 44.7 million shares in Lending Club began in March and April, reports said.
Since then, reports said Lending Club shares have been sliced nearly in half after revelations the firm mislabeled loans sold to an investor. In addition to a hit on the stock market, Lending Club has also been slapped with a lawsuit, which was filed by investors in San Francisco earlier this month.
Still, Shanda is not shying away from backing the company, whose recent troubles have led to rising doubts of the marketplace lending industry as a whole.
The firm told reporters it is “a strong believer” in Lending Club and its business model, adding that it remains “positive on its long-term prospects as it continues to evolve and refine its business.”
An unnamed source told the publication that Shanda’s acquisition will see the firm remain a passive investor.
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