Earnest Teams Up With Barclays to Find a Buyer
Barclays has teamed up with Earnest to help the student loan refinancing company find a buyer.
According to Bloomberg, student loan refinancing and fin-tech company Earnest is teaming up with Barclays Plc to find a buyer.
Earnest, which is based in San Francisco, offers a range of lending products, but it specializes in student loan refinancing and personal loans. The fin-tech startup is aiming for a purchase price of roughly $200 million according to the sources.
Those same sources confirmed with Bloomberg that Earnest has already received one offer, but the exact price is uncertain.
Founded in 2013, Earnest has been able to raise north of $300 million. More recently in March, an investor partnership of Maveron, Wildcast Venture Partners, and a few others put together a funding round of $9.8 million for the student loan refinancing company. Before that, Earnest had generated $75 million in private equity funding and $200 million in debt in 2015.
Neither Earnest or Barclays made themselves available for a comment to Bloomberg.
Earnest came in on the wave of lending and refinancing companies that marketed themselves on being able to offer lower interest rates on student loans than more traditional banking institutions. In order to do this, Earnest evaluates other borrower information besides a credit score. For example, the fin-tech startup will look at how much money the borrower has saved in retirement, their college degree, and their current job situation as ways to justify offering a lowering interest rate. Right now, Earnest offers qualified borrowers fixed interest rates as low as 3.25% and variable interest rates as low as 2.57%.
The lending industry has not been performing so well in recent times. As proof of this, two lenders, Deck Capital Inc. and Lending Club Corp., each offered IPO’s in 2014, but both have seen share prices drop by nearly 80 percent. In terms of the private market, Prosper, one of the biggest online lending startups, will soon be closing a funding round that would decrease its evaluation by 70 percent.
From its founding in 2013, Earnest has seen pretty significant growth. The company now boasts more than 200 employees, compared to when they had 30 workers in 2015.
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