Lending Club, a peer-to-peer and small business lender, plans to file for an initial public offering later this year using the banking expertise of Morgan Stanley (MS) and Goldman Sachs (GS), people familiar with the deal have told the Wall Street Journal.
The offering could bring in more than $500 million, depending on market conditions. Lending Club has been valued at about $4 billion after recent fundraising, and its valuation could go even higher in the IPO, the newspaper said.
Lending Club’s platform connects investors to individual and small business borrowers. This setup cuts out the corporate middlemen, such as credit card companies and major banks. CEO Renaud Laplanche said sees the business expanding to include institutional banks as lenders on the platform, which could help grow the company’s lending reach.
The advantage of Lending Club’s model is that it replaces “the traditional banking system with the low-cost marketplace,” Laplanche told Fortune in March. “When you put the low cost of capital of the banks and great service of Lending Club, having banks relinquish the customer relationships and becoming investors on the platform is a good way to transform the banking system.”
This vision for the transformation of the lending industry has made believers out of former U.S. Treasury Secretary Larry Summers and Morgan Stanley CEO John Mack, both of whom are on Lending Club’s board of directors.
Lending Club is one of the largest peer-to-peer lenders in the market today, which includes competitors Prosper and OnDeck Capital. These small lenders will be watching Lending Club’s IPO carefully to see how the market takes to this budding industry.