As the Internet continues streamlining business and consumer transactions, online financial transactions are increasingly becoming steady streams of revenue.
According to a source at Prudential Securities Inc., Prudential is currently working on the first-ever securitization of online revenue, with an automotive deal of undisclosed size.
The deal will be backed by auto-loans originated exclusively on the Internet, said the source, who referred to the transaction as "sexy stuff." According to the source, the deal will be public and is currently in the rating stages. It will come to market within the next month.
"We see [the Internet] as a significant future flow of business from this side of our shop, and from all of our Internet guys," said the source. "We're pitching one next week on another consumer asset. This stuff ranges from auto loans, home mortgages - we've had discussions with people about securitizing the three-year stream of payments for these long term Internet service provider contracts."
In mid-summer, Prudential formed the Internet Group in Palo Alto, C.A., a first-of-its-kind online investment management team serving Silicon Valley companies. The Internet Group is expected to "derive a significant portion of [revenue] from Internet-related activities," the source said.
According to a source at the Internet Group, this Prudential team is also in the works with a few coming deals.
"We've talked about particular transactions that are in the pipeline or maybe in the pipeline," said the source. "I'm obviously not at liberty to say who they are... It's obviously something we would like to focus on."
Paul Scura, executive vice president and head of investment banking at Prudential, said this is a topic being discussed across the board, and the asset-backed community will likely see other companies coming out with deals in the near future.
"Some of the focus is on these virtual online banks - credit card issuers, generators of financial assets," said Scura. "I mean, there is the nexus there between our Internet businesses as well as our asset-backed business."