Magazine article American Banker

Online Lender Acquires Student Loan Site, Raises Another $30M

Magazine article American Banker

Online Lender Acquires Student Loan Site, Raises Another $30M

Article excerpt

Byline: Kevin Wack

The consumer-finance startup CommonBond is doubling down on the education-debt market, which has been a pocket of tranquility in an otherwise volatile online lending sector.

The New York company said Tuesday that it is acquiring Gradible, a website where Americans who borrowed to pay for college can get advice about their options for repaying their debt.

Also Tuesday, CommonBond announced that it has raised $30 million in new equity financing, led by Neuberger Berman Private Equity, plus an additional $300 million in debt financing for loan purchases.

The new fundraising comes at a time when numerous other online consumer lenders, including Lending Club, Prosper Marketplace and Avant, are struggling to find investors to help fund their loans. All have recently announced plans to cut their staffs.

Unlike those lenders, which frequently lend to consumers seeking to consolidate their credit-card debt, CommonBond focuses on refinancing student loans. Many of the company's customers have high incomes and are seen as solid bets to repay.

"There's a little bit of a flight to quality happening," said CommonBond Chief Executive David Klein, referring to institutional investors that are backing away from their relationships with other online lenders. "We have zero chargeoffs. So that's very different from many platforms."

Until recently, CommonBond seemed poised to move beyond its roots in student lending by pursuing a strategy of cross-selling a broader suite of financial products to its well-heeled customers. Indeed, the company added personal loans to its student-loan offerings earlier this year. …

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