E-Loan Inc. (Nasdaq: EELN) surged 58 percent Tuesday after the company announced a cash infusion of $40 million, and received a bullish rating.
Shares in the online lending company were up 2 3/8 to 6 7/16. The stock has been suffering lately, along with competitors like Mortgage.com (Nasdaq: MDCM). Rising interest rates have crimped E-Loan's business. Other finanicial services companies such as Lending Tree (Nasdaq: TREE) have gone public only to suffer in the aftermarket.
E-Loan announced Tuesday that The Charles Schwab Corp., Abbey National, FT Ventures, Benchmark Capital, and Technology Partners have agreed to acquire equity stakes in the company for a total of $40 million in cash. The proceeds will be used for working capital and general corporate purposes.
Warburg Dillon Read also initiated coverage on the stock with a "buy" rating.
"Attracting investments from these financial institutions and venture capital firms is a strong validation of our business model, market opportunity, and category leadership," said CEO Chris Larsen in a company statement. "This financing is a milestone on our path to profitability and will help accelerate E-Loan's penetration into the consumer lending markets."
Of the $40 million raised, Charles Schwab Corp., Abbey National, and FT Ventures contributed $10 million each. Benchmark Capital and Technology Partners contributed $5 million each.
E-Loan also entered a strategic alliance with Charles Schwab & Co. The discount and Internet brokerage will offer mortgages through E-Loan to expand its product line.
Starting in June, Schwab customers will have access to mortgages from more than 70 lenders. As part of the deal, E-Loan said it would grant Schwab warrants totaling 13.1 million shares. The companies also might offer more customized loans in the future.
Reuters contributed to this report.