Magazine article American Banker

SEC Petitioned for First-of-Its-Kind Marketplace Lending Fund

Magazine article American Banker

SEC Petitioned for First-of-Its-Kind Marketplace Lending Fund

Article excerpt

Byline: Kevin Wack

The U.S. may soon have its first closed-end mutual fund focused on the marketplace lending sector.

In a document filed recently with the Securities and Exchange Commission, Chicago-based RiverNorth Capital Management sought permission to pioneer that market.

According to the filing, at least 80% of the fund's managed assets would be loans originated through online lending marketplaces. Those investments will come predominantly from U.S.-based lending platforms, the filing stated.

RiverNorth believes that "the recent and continuing rapid growth of the online and mobile marketplace lending industry has created a relatively untapped and attractive investment opportunity, with the potential for large returns," the document said.

[Coming this November: Marketplace Lending + Investing. Hear how participants in this fast-growth niche are using data and technology to propel lending into the 21st century.]

Unlike open-end mutual funds, which may continue to issue shares no matter how many investors are already participating, closed-end funds raise a fixed amount of capital. Initially, the RiverNorth fund will not be listed on a securities exchange, and the shares may be illiquid, according to the filing.

RiverNorth intends to use leverage and borrow up to half of the fund's total assets, the document stated.

A spokeswoman for RiverNorth declined to comment on the record, citing SEC restrictions on public comment prior to the approval of a pending application. …

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