Auto finance platform Lendbuzz eyeing IPO at over $2 billion valuation
Auto finance platform Lendbuzz eyeing IPO at over $2 billion valuation
The Israeli-founded financial technology startup that uses artificial intelligence to offer auto loans to people who lack credit history is aiming to raise between $300 million and $400 million from the share sale that could come as early as the first half of 2024
Israeli-founded Lendbuzz, a financial technology startup that uses artificial intelligence to offer auto loans to people who lack credit history, has hired investment banks for an initial public offering (IPO) that could value it at more than $2 billion, two people familiar with the matter told Reuters.
Lendbuzz's IPO preparations come as investor confidence in the consumer finance sector has picked up, with shares of financial technology companies such as Upstart and Affirm rallying in the last two months.
These companies' recent tightening of their lending standards, as well as more investors predicting a less sharp than feared economic slowdown and a drop in interest rates, have helped fuel this market sentiment.
Lendbuzz has hired Goldman Sachs, JPMorgan Chase, RBC Capital Markets and Mizuho Financial Group as lead underwriters for its planned offering, the sources said, requesting anonymity as the discussions are confidential.
The Boston-based company is aiming to raise between $300 million and $400 million from the share sale that could come as early as the first half of 2024, the sources said, cautioning that Lendbuzz's plans are subject to market conditions and could change.
Lendbuzz, Goldman Sachs, Mizuho and RBC did not immediately respond to requests for comment. JPMorgan declined to comment.
Launched in 2015, Lendbuzz extends credit to consumers and businesses who have struggled to borrow funds from traditional lenders.
More than 45 million Americans are either "credit unserved" - which means they have never had a credit card or a loan - or "credit underserved," with limited access to credit, according to data from TransUnion. Startups such as Lendbuzz are looking to tap into that growing base of customers, who are typically seen as a credit risk by large consumer banks.
Two months ago, Lendbuzz raised $345 million in a combination of $45 million in equity funding at a valuation of $1.1 billion, and $300 million in a forward flow facility.
Group 1001 led the investment round with participation from existing investors including, 83North, O.G. Venture Partners, and MUFG Innovation Partners. Lendbuzz has seen its valuation rise from $460 million in 2021, to $960 million in 2022, and to $1.1 billion this year.
Lendbuzz took its total funding to $200 million in equity and $2 billion in credit.
The equity investment expands the strategic partnership between Lendbuzz, Group 1001, and Viola Credit, with the parties executing a $300 million forward flow facility earlier this year.
According to the company, across ten consecutive profitable quarters, Lendbuzz’s revenue increased 135% in 2022, and over 80% in the first half of 2023, exceeding $200 million of annual revenue run-rate. Lendbuzz currently processes an annual borrowing volume of $1.3 billion.
Amitay Kalmar, co-founder and CEO of Lendbuzz, told Calcalist in October that Lendbuzz is placing its focus on efficiency, allowing it to expand its credit offerings without proportionate increases in expenses. “We have been profitable for 10 straight quarters and should make an annual profit of $40 million this year,” Kalmar said.
U.S. IPOs, which went through an arid period that lasted most of 2022 and 2023, are projected to rebound next year as the stock market hovers near record highs. The VIX, an index that measures volatility and is known as Wall Street's "fear gauge", is currently well below 20, which is the threshold above which market jitters are seen as too hostile for IPOs.
Several companies including social media firm Reddit, cloud security company Rubrik, healthcare payments firm Waystar, and software startup ServiceTitan are aiming for flotations in the first half of 2024.
