NEW YORK—LendKey has secured a financing commitment from MidCap Financial to purchase up to $1 billion of student consolidation loans originated on the LendKey platform.
The commitment marks the largest-ever institutional financing commitment to an online lending platform for student loan refinancing, LendKey stated in a release.
LendKey, an online lending platform, connects borrowers with local banks and credit unions. Bethesda, Md.-based MidCap Financial, a subsidiary of Apollo Global Management, cited potential for further participation in the loans to be provided by investment funds managed by Apollo.
LendKey’s platform is currently used by more than 300 credit unions, community banks and other financial institutions. The financing commitment will enable LendKey and its lender clients to expand student loan refinancing programs and provide flexibility by giving clients options for liquidity and capital management, the company stated.
“This transaction is a transformational event for the online lending industry,” said LendKey CEO Vince Passione. “Apollo is one of the world’s leading alternative investment managers and MidCap, along with the investment funds Apollo manages, are an ideal finance provider for LendKey. This commitment serves as a testament to LendKey’s success in building a valuable student loan portfolio for our current customers and a validation of the ability of online lending platforms to directly originate high-quality loans.”
The $100-billion student loan market is in need of additional refinancing options, LendKey explained.
Since 1999, student debt has increased more than 500% continued LendKey. “The average student loan debt is at an all-time high of $33,000 per student with interest rates in excess of seven percent. The commitment by MidCap will allow LendKey to develop new products and expand offerings on www.LendKey.com. Consumers can compare loans from different lenders, quickly apply for loans using LendKey’s digital loan application and rely on LendKey’s exceptional customer service for help during the entire process.”
“We believe the financing commitment from MidCap will provide a much-needed set of expanded opportunities for lenders and borrowers across the fast-growing student loan market,” said James Zelter, managing partner and chief investment officer of Apollo Credit. “As credit unions and other financial institutions navigate the changing interest rate environment and contemplate potential risk-based capital measurements, we believe LendKey is uniquely positioned to provide its clients with a facility to sell student consolidation loans and, in the future, other consumer loans.”