Main Street Capital Corporation has purchased an equity stake in fixed-income, alternative investment firm Looking Glass Investments (LGI) and invested directly in private investment vehicles managed by LGI.
“By any measure, Main Street is a top-tier business development company and their investment represents an important recognition of what we have accomplished,” says Matthew O’Malley, President and Chief Operating Officer. “Main Street’s investment capital will be used to support the ongoing development of our underwriting technology, our data management, and our rigorous investment research process managed by our team of Ph.D. economists.”
“We are pleased to become a strategic partner with Looking Glass Investments,” says Dwayne Hyzak, President and Chief Operating Officer of Main Street. “Looking Glass has built superior predictive analytics models supported by efficient technology. As this asset class continues its explosive growth we believe LGI will emerge as the premiere manager in this space.”
The increased level of federal and state regulation after the Great Recession placed traditional banks in position to essentially discontinue unsecured lending products. Marketplace lending has addressed this demand in a way that has brought positive feedback from regulators, such as the Federal Reserve Bank of Cleveland, which wrote last year, “Individuals who either cannot get loans from traditional banks or who wish to consolidate their credit card balances at lower interest rates find peer-to-peer (marketplace) lending an attractive alternative.”
According to Morgan Stanley, domestic marketplace loan origination has doubled every year since 2010 and is expected to reach USD122 billion by 2020. According to data from the Federal Reserve Bank of Cleveland, marketplace lending has been growing at an average pace of 84 percent a quarter.
O’Malley says: “The partnerships we have established with Lending Club, Prosper, Funding Circle, and Peerform over many years places our firm in a position to grow with the market. These platforms, among many others, have created a market for investors and consumers which we believe will drive significant growth in the US and around the world. This is the future of finance.”
