Updated from Nov. 4 with the following correction: A previous version of this story incorrectly listed Sequoia Capital as a backer of LendingClub.
NEW YORK (TheStreet) -- Investors may be eagerly awaiting the initial public offering of LendingClub, a peer-to-peer lender funded by the likes of BlackRock (BLK) and T Rowe Price (TROW) , but another transaction may prove a more attractive investment when pawn-shop lender Cash America (CSH) prepares to spin off its online lending division, Enova, on Nov. 13. Enova is expected to trade independently under the ticker ENVA.
In a report on Enova published Monday, Sterne Agee analyst Henry Coffey said he foresees "a likely favorable comparison to pending peer-to-peer lending models such as LendingClub."
Unlike LendingClub, which has filed with the Securities and Exchange Commission to sell its shares to the public, Enova makes the vast majority of its loans off its own balance sheet. LendingClub and other peer-to-peer lenders such as Prosper Marketplace and Funding Circle Limited connect borrowers with investors who want to lend to them.
LendingClub, whose Board of Directors includes such notables as John Mack, the former Morgan Stanley (MS) and Credit Suisse (CS) CEO; Larry Summers, the former Treasury Secretary; and Kleiner Perkins Caufield & Byers executive Mary Meeker, calls itself "the world's largest online marketplace connecting borrowers and investors," according to a regulatory filing. It has facilitated over $5 billion in loans since opening in 2007, including lending more than $1 billion in the second quarter of 2014.
LendingClub says it offers "a more efficient mechanism to allocate capital between borrowers and investors than the traditional banking system," contending its borrowers use it "to lower the cost of their credit and enjoy a better experience than traditional bank lending."
Lender/investors, meanwhile, use LendingClub "to earn attractive risk-adjusted returns from an asset class that has historically been closed to individual investors and only available on a limited basis to institutional investors," the filing states.
The main thing Enova and the peer-to-peer lenders have in common is that they conduct business entirely online.
Online lenders "don't have the fixed infrastructure cost of having the actual offline stores and personnel. It's a more scalable model," says Sameer Gokhale, analyst at Janney Capital Markets. That should make these lenders more popular with millennials, and "increasingly they do all of their financial transacting online," Gokhale says.