OnDeck Capital Surges Above $20 IPO Price

By Corrie Driebusch 

Shares of web-based small-business lender OnDeck Capital Inc. opened at $26.50, 32.5% above their initial public offering price Wednesday.

The stock recently traded at $27.08 on the New York Stock Exchange, above where the stock opened.

The big pop comes a week after Lending Club, another alternative lender, also posted a strong debut.

On Tuesday, OnDeck raised $200 million by selling 10 million shares at $20 apiece, above its planned range, before taking into account the overallotment option, which gives underwriters the opportunity to sell additional shares under certain circumstances.

OnDeck provides loans to small businesses in the range of $5,000 to $250,000 with terms of three months to 24 months.

Since making its first loan in 2007, OnDeck has originated more than $1.7 billion in loans and collected more than 4.4 million customer payments, according to company filings. Most of its revenue comes from interest income and lending fees earned on the term loans it retains.

Its business model differs from Lending Club, in that Lending Club primarily operates as a platform for outside investors to lend to individuals--a practice known as peer-to-peer lending--while OnDeck focuses on lending small businesses money from its own pool of capital.

Despite the differences, fund managers said the success of Lending Club's IPO helped pave the way for OnDeck's debut.

Last week Lending Club sold 58 million shares at $15 apiece, above the $12- to $14-a-share range outlined in a filing with regulators. Shares of Lending Club surged 56% from their IPO price in their first day of trading. It closed trading on Tuesday at $26, 73% above its IPO price.

The deal was led by Morgan Stanley, Bank of America Merrill Lynch, J.P. Morgan, Deutsche Bank and Jefferies.

Write to Corrie Driebusch at [e-mail]

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