NEW YORK — Online lending platform LendKey said MidCap Financial has committed to purchase up to $1 billion of student consolidation loans originated on the LendKey platform.

LendKey connects borrowers with local credit unions and banks. LendKey now works with more than 300 CUs, including its most recent addition, Navy Federal Credit Union. Using LendKey's platform, Navy Federal will offer private student loan options to all of its members.

MidCap Financial is a specialty finance firm that is managed pursuant to an investment management agreement by a subsidiary of Apollo Global Management, LLC, an alternative investment manager.

The two parties said potential further participation in the loans may be provided by investment funds managed by Apollo. LendKey said the financing commitment will enable it and its lender clients to expand student loan refinancing programs and provide flexibility by giving clients options for liquidity and capital management.

This marks the largest ever institutional financing commitment to an online lending platform for student loan refinancing, the two parties said.

"This transaction is a transformational event for the online lending industry," Vince Passione, LendKey's CEO, said in a statement. "Apollo is one of the world's leading alternative investment managers and MidCap, along with the investment funds Apollo manages, are an ideal finance provider for LendKey. This commitment serves as a testament to LendKey's success in building a valuable student loan portfolio for our current customers and a validation of the ability of online lending platforms to directly originate high quality loans."

According to LendKey, the $100 billion student loan market is in need of additional refinancing options. Since 1999, student debt has increased more than 500%. The average student loan debt is at an all-time high of $33,000 per student, with interest rates in excess of 7%.

The commitment by MidCap will allow LendKey to develop new products and expand offerings on www.LendKey.com. The company said consumers can compare loans from different lenders and apply for loans using LendKey's digital loan application.

"We believe the financing commitment from MidCap will provide a much needed set of expanded opportunities for lenders and borrowers across the fast-growing student loan market," said James Zelter, managing partner and chief investment officer of Apollo Credit. "As credit unions and other financial institutions navigate the changing interest rate environment and contemplate potential risk-based capital measurements, we believe LendKey is uniquely positioned to provide its clients with a facility to sell student consolidation loans and, in the future, other consumer loans."

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