Prosper, a Peer-to-Peer Lender, Raises $70 Million

As peer-to-peer lending â€" in which borrowers connect with lenders directly online â€" takes off, one of the biggest players in the field is taking advantage by raising more money.

Prosper plans to announce on Monday that it has raised $70 million in a new fundraising round, one led by the investment firm Francisco Partners. Two other venture capital firms, Institutional Venture Partners and Phenomen Partners, also participated.

The new round comes less than a year after the company raised $25 million in a round that included BlackRock, the money manager that was eager to serve as both investor and lender. And it comes as big financial firms are muscling into the peer-to-peer lending market, moving it further away from its roots of pairing up individuals for loans and make it a burgeoning new industry.

That growth has propelled the fortunes of big players like Prosper and Lending Club, the latter of which is the biggest peer-to-peer lender and expected to go public sometime this year.

Prosper hadn’t been looking for new money, its chief executive, Aaron Vermut, said in an interview. But at least one investment firm sent over a fully written term sheet several weeks ago, prompting the company to explore raising more money. Ultimately, the lending market place decided upon Francisco Partners, turning down some offers that offered a higher valuation because the firm promised the right mix of insight and money.

“Frankly, we went with Francisco because they were the perfect match,” Mr. Vermut said.

As part of the round, David Golob, an executive at Francisco, will become a director.

The financing also comes after Mr. Vermut and his team, including his father, took over Prosper last year to help rebuild a company that had stumbled for years while Lending Club had become the leader in the industry.

Now, however, Prosper claims to be the second-biggest peer-to-peer lending platform, with 35 percent of the market. Its platform has originated $1 billion worth of loans as of last month, and the company is aiming to double that by year end.

“The turnaround is complete,” Mr. Vermut said. “We’re actively growing.”

With the new money, the company intends to continue growing. Some of the money will go toward an expanded marketing campaign, including online advertising, shifting away from primarily direct marketing focusing on debt consolidation.

The fund-raising will also go toward developing new kinds of loans, though executives have long made clear that they will remain focused on personal loans for the time being. That’s a different stance from Lending Club, which has been moving into new areas like small business loans.

The additional money will also help pay for growth at the company, including new corporate offices in San Francisco and more employees, including programmers.

“It gives us flexibility to take maximum advantage to grow,” Mr. Vermut said.

About $20 million of the round will help existing shareholders cash out as well.

The new round raised Prosper’s valuation sixfold from the last fund-raising effort, to about $600 million, according to a person briefed on the matter. Mr. Vermut declined to comment.

Though Lending Club is considering going public, Prosper is taking a more cautious approach, according to its chief executive. The company isn’t ready yet for an I.P.O. and is willing to let its rival test the waters of the public markets first.

“If it goes really well, it will be a validation for the space,” Mr. Vermut said of a Lending Club stock offering. “We’re not there yet. We’re just operators, building our business.”

Hedge Fund Asks S.E.C. To Delay Disclosures

Mr. Einhorn’s request to the S.E.C. for confidential treatment illustrates the zealous approach some managers in the $2.7 trillion hedge fund industry take when it comes to keeping their trading positions out of the public eye. But it also reflects the risk that can come with being a money manager like Mr. Einhorn, who has cultivated press coverage over the years when it suits his interests.

In support of its request, Greenlight attached several news articles describing how prices of stocks often rise or fall sharply on reports that Mr. Einhorn’s firm is either buying them or betting that they will fall. The firm, which has $10 billion in assets under management, offered the articles as proof that a premature disclosure of its buying strategy on Micron would cause “substantial” financial harm to its investors because the hedge fund intended to keep accumulating shares for at least another week.

The regulatory filing for which Mr. Einhorn requested confidential treatment is called a Form 13F. It is filed 45 days after the end of a quarter to provide the investing public with a snapshot of a manager’s holdings of United States stocks. The S.E.C. seldom grants requests by investment managers for confidential treatment, but because it can take weeks, or even months, for a request to be reviewed, a manager gets the benefit of the doubt to keep a position secret simply by asking regulators to consider it.

The 10-page letter, portions of which were redacted by the S.E.C., glosses over the fact that Mr. Einhorn has never been shy about speaking about his firm’s stock holdings at charitable events and conference calls â€" as he did on a call last year when Greenlight proposed that Apple use some of its $137 billion cash reserve to issue a dividend-paying preferred class of stock.

The redacted letter does not mention that the seven-day window of secrecy was set to expire on the same day that Mr. Einhorn planned to appear at a charitable event in New York City where he was supposed to unveil his “best” investing idea. It was at that Nov. 21 investors conference, sponsored by the nonprofit Robin Hood Foundation, where Mr. Einhorn first disclosed that his fund had taken a big equity stake in Micron.

Mr. Einhorn’s presentation, giving a bullish case for Micron’s stock, caused a big splash at the event, which was attended by other prominent hedge fund managers. On the same day Mr. Einhorn spoke at the Robin Hood conference â€" he is the foundation’s vice chairman â€" he also appeared on the cable business channel CNBC to discuss his views on Micron.

By the close of trading on Nov. 21, shares of Micron had jumped 6 percent, with most news outlets crediting Mr. Einhorn, 45, with pushing the shares higher.

Paul G. Hodgson, a principal at BHJ Partners, a corporate governance consulting firm, said money managers like Mr. Einhorn were taking advantage of what he called a “loophole” that has long existed in the confidential treatment process that enables them to keep positions secret until the S.E.C. decides on the request. He said managers might be less inclined to take advantage of the loophole if the S.E.C. moved faster in reviewing requests.

“It is a little hypocritical of money managers to exploit that loophole because they want press attention when it serves their interests,” Mr. Hodgson said.

The S.E.C. declined to comment on Greenlight’s confidential treatment request.

Last fall, the S.E.C. issued guidance to money managers advising them that requests for confidential treatment “should demonstrate the likelihood of substantial harm” and provide specific examples.

Jay G. Baris, a partner in New York with the law firm Morrison & Foerster, said that in recent years the S.E.C. had become “much more sensitive” about requests for confidential treatment from money managers, but he added, “there are legitimate reasons to request confidentiality.”

Jonathan Gasthalter, a Greenlight spokesman, declined to comment. But Mr. Gasthalter pointed to a comment made a year ago by Mr. Einhorn in which the money manager cautioned investors to do their own work and not “blindly follow me or anyone else into a stock.”

Mr. Einhorn’s request to the S.E.C. for confidential treatment probably would have gone unnoticed if not for a lawsuit he filed earlier this year to learn the identity of an anonymous blogger on the financial website Seeking Alpha, who wrote a post last November suggesting Greenlight was taking a big stake in Micron. The post was published the same day that Greenlight sent its letter to the S.E.C. seeking confidential treatment.

In March, Mr. Einhorn’s firm dropped the suit after it said it had learned the identity of the blogger, and presumably the person who leaked the information about Micron. The identity of the blogger, known as Valuable Insights, has not been made public.

Greenlight’s investment in Micron has proved to be one of Mr. Einhorn’s better performing trades. Shares of Micron are up 32 percent since Mr. Einhorn’s presentation at the Robin Hood conference.

On Monday, Mr. Einhorn, whose fund is up 3.2 percent for the year, will once again take to a public forum to present some of his best investing ideas. He is scheduled to speak at another annual charitable event, held by the Sohn Conference Foundation, during which top money managers present their best ideas to a crowd of wealthy investors who pay thousands of dollars to attend. Other speakers at the Sohn conference will include the money managers William A. Ackman, Jeffrey Gundlach and Paul Tudor Jones II, founder of the Robin Hood Foundation.

The Sohn conference, which raises money for pediatric cancer treatments and is named after the hedge fund trader Ira Sohn, who died of cancer at 29, is one of the signature events for hedge fund managers to present their best trading ideas.

In 2008, Mr. Einhorn rocketed to hedge fund stardom when he used the conference to take on Lehman Brothers and criticize its accounting practices â€" months before the firm collapsed at the height of the financial crisis. In December 2012, at a special Sohn conference, Mr. Ackman unveiled his $1 billion short position on the nutritional supplement manufacturer Herbalife, which has made headlines for the last 18 months.

“I guess it is all playing the press. They all do it,” said Mr. Hodgson, commenting on hedge fund managers going public with their trades. “It is their modus operandi, and it tends to be very effective.”

A version of this article appears in print on 05/05/2014, on page B1 of the NewYork edition with the headline: Hedge Fund Asks S.E.C. To Delay Disclosures .

Thoma Bravo Raises $3.65 Billion Fund for Buyouts

Thoma Bravo, a private equity firm focused on technology companies, is expected to announce on Monday that it has raised $3.65 billion for a new fund.

The fund is the largest ever raised by Thoma Bravo, exceeding by more than $1 billion the goal set by the firm when it began raising the capital in January. Thoma Bravo’s previous fund totaled $1.7 billion.

The demand for the new fund probably reflects investor appetite for mature technology companies, which are Thoma Bravo’s specialty. The firm in recent years has completed buyouts of Blue Coat Systems, an 18-year-old maker of enterprise security software, and Deltek, an enterprise software company founded in 1983.

It also reflects Thoma Bravo’s willingness to make bigger deals.

“I think there is a little bit of a tech bubble at this moment, and that has pushed up valuations,” Orlando Bravo, a managing partner of the firm, said in an emailed statement. “However, our investment strategy is focused on immediately reducing a company’s operating costs and improving its profitability.”

Mr. Bravo added, “We feel we can do well even in periods of relatively higher valuations.”

With the new war chest, Thoma Bravo could team up with its limited partner investors to write equity checks as large as $1 billion, Mr. Bravo said. That could translate into leveraged buyouts as large as $5 billion. Still, bigger deals are likely to be an exception to the rule.

Private equity firms have recently been raising capital at a rapid clip, as pension funds and other big investors seek market-beating returns. One giant firm, Apollo Global Management, raised a $18.4 billion fund in January. And Bain Capital raised $7.3 billion in April.

These firms now face the challenge of spending all that cash, at a time when stock markets are relatively buoyant. Many private equity firms are looking for unique situations where they can make use of their particular skills, seeking to avoid competitive auctions that can drive up valuations.

Thoma Bravo, which has offices in Chicago and San Francisco, and traces its history to a predecessor firm that was established in 1980, has developed a playbook for technology deals. Mr. Bravo said the firm likes to help companies make the transition from licensing software to selling it through the cloud, a delivery method called software as a service.

But even as these software trends evolve, much about technology has remained consistent, he said by phone.

“We’re pursuing the same companies we were pursuing 10 years ago,” Mr. Bravo said. But because of acquisitions and organic growth, “they’re now much larger.”

China’s Baosteel Leads $1.3 Billion Bid for Australian Miner

HONG KONG â€" Baosteel Group, one of China’s biggest steel makers, is leading a $1.3 billion takeover bid for the Australian miner Aquila Resources as Chinese companies continue their global search for raw materials.

Baosteel, a state-owned company and the parent of the Shanghai-listed Baoshan Iron and Steel, has teamed up with Aurizon Holdings, Australia’s largest rail freight operator, in bidding for Aquila, which is developing a giant iron ore mine in Western Australia’s mineral-rich Pilbara region.

The bidders are offering 3.40 Australian dollars, or $3.15, for each share of Aquila they do not already own, Aquila said Monday in a stock exchange filing. That represents a premium of 39 percent to where Aquila’s stock closed on Friday â€" at 2.45 dollars per share â€" and values the company at 1.42 billion dollars.

Baosteel has invested in Aquila since 2009 and holds a 20 percent stake in the company. If successful, the takeover offer would leave Baosteel owning 85 percent to 90 percent of Aquila, with Aurizon taking up the remaining stake.

Aquila owns 50 percent of the West Pilbara Iron Ore Project, a mine with a budgeted development cost of more than $7 billion that is expected to produce 30 million tons of ore for export annually, once it opens. AMCI, a privately owned Australian resources investor, and Posco Group, a South Korean company, control the other half of the West Pilbara project, which aims to meet demand for iron ore, a key input for making steel, from fast-growing economies in Asia.

Since Baosteel made its initial investment five years ago, “Aquila has had numerous confidential discussions with the Baosteel Group about its potential direct participation in the West Pilbara Iron Ore Project,” Tony Poli, Aquila’s executive chairman, said Monday in a news release. “However, the unsolicited proposal, to acquire control of Aquila, is a new development.”

Aquila, which is being advised by Goldman Sachs, said it would form an independent board subcommittee to evaluate the bid. Baosteel and Aurizon have already applied for approval for the proposed takeover from Australia’s Foreign Investment Review Board and are “highly confident” of receiving approval, the companies said in a statement.

Baosteel is being advised on the deal by Deutsche Bank while Aurizon has hired Satori Investments and UBS.