OnDeck Prices Over Range Setting Up for IPO

Banking, finance, and taxes

Published: December 17, 2014 8:50 am

OnDeck Capital Inc. announced the pricing for its initial public offering Tuesday night. The company stated the pricing as $20, above the expected price range of $16 to $18. There are 10 million shares in the offering, with an overallotment option for an additional 1.5 million shares. Ultimately this would value the total filing at $230 million.

The underwriters for the offering are Morgan Stanley, Bank of America Merrill Lynch, Raymond James, J.P. Morgan, Stifel, Deutsche Bank, Jefferies and Needham. OnDeck will list on the New York Stock Exchange under the symbol ONDK. Shares are expected to begin trading on Wednesday, December 17, 2014.

The company operates an online platform for small business lending. Small businesses can apply for a term loan or line of credit on the company’s website in minutes and, using its proprietary OnDeck Score, it can make a funding decision immediately and transfer funds as fast as the same day. Since its first loan in 2007, OnDeck has originated more than $1.7 billion in loans and collected more than 4.4 million customer payments. Loan originations have increased at a compound annual growth rate of 127% from 2011 to 2013 and had a year-over-year growth rate of 171% for the nine months ended September 30, 2014.

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OnDeck believes that the small business lending market is vast and underserved. According to the FDIC, there were $178 billion in business loan balances under $250,000 in the United States in the second quarter of 2014, across 21.7 million loans. The company also believes that the application of its technology to credit assessment can stimulate additional demand for its products and expand the total addressable market for small business credit.

OnDeck originated $458.9 million of loans in 2013, representing year-over-year growth of 165%, and in the first nine months of 2014, the company originated $788.3 million of loans, representing year-over-year growth of 171%, all while maintaining consistent credit quality. In 2013, the company recorded gross revenue of $65.2 million, representing year-over-year growth of 155%. In the first nine months of 2014, gross revenue was $107.6 million, representing year-over-year growth of 156%.

After the offering, the proceeds are intended to be used primarily for general corporate purposes and to potentially acquire or invest in new technologies, solutions or businesses that complement the company’s model.

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