Since his surprise departure as CEO of Citigroup in 2012,
Vikram Pandit has lent his name, expertise and monetary support
to various corners of the financial world. His investments have
ranged from Indian real estate lender FICS Consultancy Services
to U.K. money transfer start-up TransferWise. One of his
favorite targets is peer-to-peer, or marketplace, lending.
Pandit, 59, was an early investor in student loan service
CommonBond, trading technology provider
Orchard Platform and credit risk assessment outfit PeerIQ.
These U.S. firms are all part of a disruptive alternative
financial economy that hopes to upend much of the business done
by Pandits former employers.
Peer-to-peer platforms let borrowers and lenders find each
other online, with borrowers typically vetted and given access
to funds much faster than if they went through the traditional
application process at a bank. The sector has grown rapidly in
recent years, especially as banks have struggled under new
regulations in the wake of the 200809 financial
crisis and as borrowers embrace technology-based services.
Banks have mostly been playing catch-up, partnering with
peer-to-peer players to gain new borrowers and in some cases
buying loans on lending platforms. For the most part, they want
to make sure they dont get left behind. Pandit is
ensuring that he wont.
[Pandit] recognized the shift in the financial
industry and started to invest in companies that are the gold
standard, or have the potential to be, in their respective
space, says fintech entrepreneur and investor Val
Katayev, managing partner of Prime Meridian Capital Management,
a San Ramon, Californiabased investment firm that
specializes in peer-to-peer lending. Names like PeerIQ
and Orchard are the tools for the industry and have carved out
a solid market share that will be hard to displace.
Pandit helped to develop Morgan Stanleys electronic
trading and prime brokerage capabilities during his tenure at
the U.S. bank from 1983 until 2006, when he left to launch New
Yorkbased hedge fund firm Old Lane Partners with
exMorgan Stanley colleague Guru Ramakrishnan and others.
Citi bought Old Lane in 2007, and in December of that year
Pandit became Citis CEO, tasked with restabilizing a firm
that was battling poor performance made worse by the breaking
financial crisis. After his October 2012 resignation amid talk
that he was being forced out by the board, Pandit shrank from
the spotlight, emerging to join consulting firm TGG Group as
chair in 2014.
Behind the scenes he made early investments in New
Yorkbased Orchard, founded in 2013 by Matt Burton and
Jonathan Kelfer, previously of Google, with Angela Ceresnie and
David Snitkof, who had both worked at American Express Co. and
Citi. CEO Burton says that when the team was setting up
Orchard, the missing piece was how best to run a new credit
platform. Thats what Pandit brought to the table.
Vikrams been very helpful in helping us
understand how the bigger financial services machine works and
how we can effectively plug ourselves in, which are the rules
that cannot be broken and which are things that are there just
because theyre legacy issues, Burton explains.
Those who have worked with and around Pandit say that he and
fellow marketplace lending investors such as former Morgan
Stanley CEO John Mack and exThomson Reuters chief
executive Thomas Glocer add value to up-and-coming firms simply
by attaching their names to a venture. An early-stage
investment from someone like Pandit or Glocer also often gets
the investors additional equity in the form of advisory shares
When Vikram invests, it gets attention from other
executives and institutions to take a hard look at this
space, Katayev says.
Follow Kaitlin Ugolik on Twitter at @kaitlinugolik.