Thrivent invests in College Ave Student Loans
WILMINGTON – College Ave Student Loans, a major fintech lender for private student loans, has a new majority shareholder after Fortune 500 company Thrivent acquired shares from prior investors.
The addition of Thrivent, a Minneapolis-based diversified financial services company with $10 billion in revenue last year, is a boost for the growing 7-year-old College Ave.
The startup was launched by two former Sallie Mae and MBNA executives, Joe DePaulo and Tim Staley, who saw an opportunity to use simplistic online applications for private college loans after the share of competitors dropped dramatically following the Great Recession. It also offers lower interest rates than competitors and allows for refinancing of student loans, a unique industry feature.
Today, College Ave is a top brand name in the space and the third largest in-school lender, originating and servicing more than $1 billion in student loans annually.
While the value of Thrivent’s investment in College Ave was not disclosed in the Sept. 12 announcement, College Ave called it a “significant commitment.” The company told Delaware Business Times that its leadership had not divested their shares in the deal that closed July 21.
“It was a natural evolution given College Ave’s growth and achievements to take advantage of the opportunity to engage with a strong and strategically-aligned partner in Thrivent,” the company told DBT in a statement about its new majority shareholder.
The leadership, branding and strategy for College Ave will remain the same following the investment, officials said. That includes the securitization of loans, which the company has completed four times to date, most recently in February when it secured $385 million. College Ave’s securities have received top marks from rating agencies, attracting 56 total institutional investors, including some of the largest global asset managers.
The company will continue to remain headquartered in a North King Street office in Wilmington and will continue to add employees as its business grows. Today, it employs about 75 people.
College Ave had raised $60 million in prior venture and seed funding rounds from investors like Comcast Ventures, the investment arm of the cable giant; Fenway Summer, a D.C.-based venture capital firm; DW Partners, a New York hedge fund; Leading Edge Ventures, a Newark-based early-stage investment firm led by well-known local entrepreneurs; and Albert Lord, the former CEO of Sallie Mae who brought the student lending giant to Delaware.
It’s unclear how many, if any, of College Ave’s prior investors remain involved with the private company following the acquisition of shares by Thrivent. Officials did not respond to a DBT question about their involvement, only saying that company leadership retained their shares.
In 2019, College Ave also secured debt financing worth up to $65 million from Maryland-based investment firm Guggenheim Investments, which would allow it to borrow money to fund future expansion.
Thrivent’s investment in College Ave will power the company “to explore faster growth and new expansion opportunities, while maintaining its promise to deliver best-in-class products for students and families,” officials said.
“This is an ideal opportunity for College Ave because we will benefit from a strategic partnership with Thrivent and gain access to capital to continue to invest in and grow our business,” DePaulo, who serves as CEO of College Ave, said in a statement. “We’re committed to helping students and their families make informed decisions about funding their education through responsible, competitive loans. This partnership helps us further our mission.”
Stephen Friend, vice president of M&A and corporate development at Thrivent, said his company was “always looking for ways to leverage our financial strength and deliver value for our membership.”
“This formalized relationship with College Ave Student Loans is an excellent way for us to invest in an important asset class and partner with an organization that has a strong management team, an attractive growth trajectory and a mission that aligns with our purpose to help people make the most of all they’ve been given,” he added in a statement.