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Enova to buy OnDeck for $90m

Enova to buy OnDeck for $90m

OnDeck, the online lender to small businesses, is being acquired by rival Enova in a cash and stock deal worth around $90 million.

The $90 million - $8 million of which will be in cash - is a 90% premium on OnDeck's closing price on Monday.

Founded in 2006, OnDeck was a pioneer of the alternative lending market, using data analytics and digital technology to make real-time lending decisions. The firm went public in 2014 and joined the unicorn club.

However, it has struggled in recent times. Last year JPMorgan Chase ended a four-year collaboration with OnDeck to provide online loans to small businesses. The US bank has brought processing inhouse to offer similar services from its own platform, a decision which sent shares in OnDeck tumbling.

The company posted a $59 million loss in the first quarter of 2020 and has been further hit by the economic fallout from the Covid-19 pandemic.

Noah Breslow, CEO, OnDeck, says: "Following an extensive review of our strategic options, we believe this is the right path forward for our customers, employees and shareholders.

"Joining forces with Enova, a highly-respected and well-capitalized leader in online lending, and leveraging our combined scale and strengths, provides the best opportunity for our long-term success."

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 30 July, 2020, 13:03Be the first to give this comment the thumbs up 0 likes

I remember a time when nonbank startups - neobanks, fintechs, PSPs and online P2P lenders alike - threatened to kill traditional banks despite holding master accounts at traditional banks and running off of traditional banking rails and lending traditional banks' monies. The fact that JPMC's pulling out of lending agreement with OnDeck led to tumbling of OnDeck's stock price should be a sober reminder of the sheer idiocy of their threats. But this won't stop them from continuing to make those threats, at least in private. VC funding for the Internet, on which they all these nonbank startups depend, still values disruption / displacement over creation. There's no way these startups can raise VC funding at frothy valuations by claiming that they will partner with banks. Interesting times ahead...