Funding Circle makes European acquisition

The purchase expands the UK and US SME lending platform’s reach into three new continental European countries.

SME lending platform Funding Circle is pushing into continental Europe with the acquisition of Zencap which has operations in Germany, Spain and the Netherlands.

Financial terms of the acquisition were not disclosed.

Zencap was established by Rocket Internet in March last year. The platform has facilitated loans totalling more than €35 million to 520 businesses. Zencap’s existing European businesses, which will change its name to Funding Circle, will be led by co-founders Matthias Knecht and Christian Grobe.

“We have been hugely impressed with what the Zencap team have achieved so far. By coming together we combine Funding Circle’s leading position in the UK and US with Zencap’s deep understanding of local markets to create the first truly global marketplace lending platform,” said Samir Desai, chief executive and co-founder of Funding Circle. The move opens up a large new market for the UK-headquartered marketplace lender. Outstanding loans small- and medium-sized businesses (SMEs) across Europe total more than €1 trillion, the lender said.

Funding Circle has facilitated around $1.5 billion of lending to SMEs in the UK and US over the last five years. The firm is raising capital for a listed UK investment trust, allowing investors – retail and institutional – to buy shares in a vehicle which will invest via the platform.

Zencap recently announced it has signed a €230 million agreement with Victory Park Capital to lend via its marketplace. Victory Park has a similar existing agreement with Funding Circle and invests in about a dozen marketplace lenders through its own London-listed investment trust, VPC Specialty Lending. 

Funding Circle was launched in 2010 to facilitate loans to small businesses by investors. It has expanded its business and invests a large volume of institutional capital alongside small independent investors.