Upstart, a San Carlos, California-based online lender, has confidentially filed an S-1 with the SEC, but current market volatility has put the IPO date up in the air, said two sources familiar with the situation.
If it proceeds with a listing, the fintech lender could raise up to USD 200m at an enterprise value of around USD 2bn, the sources said. Upstart’s original plan was to start trading at the end of May, the first source added.
Upstart has hired bookrunners to pursue an IPO, including Goldman Sachs, BofA Securities and Citi, this news service reported last month.
US stocks have plunged since record highs in February, triggered by concerns about the coronavirus outbreak and a potential economic downturn. Companies that have delayed US listings include Airbnb, Warner Music and Cole Haan, according to previous reports.
As an online lender, Upstart faces additional challenges securing its expected valuation, two sector advisors said. Consumer lenders like Upstart may have difficulty accessing the securitization markets, which are tightening and potentially seizing up, the first sector advisor said.
Meanwhile, the business interruption and economic impact caused by the pandemic could lead to higher default rates in consumer credit, which would draw concerns from investors in the public markets, the sector advisor said.
The stock price of LendingClub [NYSE:LC] has dropped around 32% since the market peak at mid-February. Oportun Financial [NASDAQ:OPRT], a fintech lender that went public in September 2019, has seen a decrease in stock price by 40% in the past month.
Upstart, founded in 2012, says it considers factors other than credit scores when evaluating borrowers’ credit worthiness. The company has been shifting from direct lending to providing its technology to banking partners, as reported.
In February, Upstart issued its ninth securitization, a USD 110m deal that priced in early February, according to Kroll bond Rating Agency.
Upstart and Goldman Sachs declined to comment.
by Yizhu Wang in New York and Troy Hooper in Los Angeles