The continuing education market is growing rapidly and it is not surprising that the associated student loan business is attracting the interest of major investors.
Launched in 2007, British startup Prodigy Finance recently secured $ 750 million in funding from North American investment giants, helping it provide more loans to foreign student borrowers who are underserved by traditional lenders and who usually need a co-signer or a credit history to qualify for a loan in their country of study.
The funding round was led by Canadian private equity fund CPP Investments, which pledged up to $ 500 million in funding, while the U.S. government’s development finance institution (DFC) hired another $ 250 million facility covering student loans in income countries.
“This increase of $ 750 million, which is one of the biggest of the year for a UK-based company and more than what we have collected in 10 years of activity, shows the levels of confidence and faith in our business model that our investors have in us, ”Prodigy Finance founder Cameron Stevens reportedly told the Evening Standard.
Read more: Prodigy Finance raises $ 240 million for its expansion in the United States
The loan startup has already raised $ 240 million in 2017 and already has the backing of the UK government through the Chancellor’s Future Fund, which has invested over £ 1 billion (the equivalent of around $ 1.58 billion ) in startups to date, and has stakes in more than 150 of them.
Private student lender operates a ‘future income potential’ credit model and has granted over $ 1 billion in loans to more than 20,000 students from over 100 countries studying at some of the world’s top ranked institutions , including Harvard, Oxford, Columbia and the Wharton School.
In the footsteps of SoFi?
The huge investment in Prodigy could put the company on a similar path to what Social Finance – more commonly known as SoFi – recently took, from a student loan provider when it launched in 2011 to a digital bank offering traditional banking products. and services, such as checks, credit cards, and home and auto loans. The company currently has over 2.6 million members, $ 50 billion in funded loans and over $ 22 billion in debt repaid.
Read more: SoFi-Social Capital Merger to Fuel Growth of One-Stop Financial Supermarket
In May of this year, PYMNTS wrote that SoFi had merged with a specialty acquisition company (SPAC) known as Social Capital Hedosophia Holdings in an $ 8.6 billion deal. Soon after, it went public, raising $ 2.4 billion when it started trading on the Nasdaq in June.
Related news: SoFi Financial Services Platform Plans IPO Via SPAC
San Francisco-based FinTech, now SoFi Technologies, is now a one-stop-shop for digital financial services for former student clients who have since secured positions.
Last year, the company acquired payments firm Galileo in a deal valued at over $ 1 billion and expanded outside the United States for the first time with the acquisition of Hong Kong 8 Securities investment application.
Also see: SoFi spends $ 1.2 billion to buy FinTech Galileo
And like SoFi Technologies, Prodigy Finance could follow the same path with the announcement that the new cash injection will be used to expand in key markets such as China, South Korea and Singapore.
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Zimbabwean national Diana Nleya said the lender was one of the “only two options” she had when she came to the United States to pursue an MBA at Columbia University in New York.
And she believes the company “has the inherent qualities to be a digital lender” given its history of loan repayments and big books, “and the fact that a good chunk of their clients probably have still struggling to access credit. [while] working in foreign countries, ”said Nleya, who has since secured an associate position in McKinsey’s New York office.
In July, the neobank entered the fixed income market, issuing a $ 288 million quality student loan asset-backed security backed by its loan portfolio.