Funding Circle vehicle IPO raises £150m

The SME-focused marketplace lending platform’s new investment trust hit its capital raising target from the flotation of Funding Circle SME Income Fund Limited.

Funding Circle SME Income Fund Limited has raised £150 million ($226 million; €214 million) from its initial public offering (IPO).

The London-listed investment trust is the first raised and managed by a marketplace lending platform directly.

Several other listed investment trusts have been raised to invest into marketplace lenders, including P2P Global Investments, VCP Specialty Lending and Ranger Direct Lending.

The shares were priced at £1 each and the firm hit its £150 million target for the IPO. The shares are expected to be admitted to the London Stock Exchange list and begin trading on 30 November.

The vehicle is targeting total return on net asset value of 8-9 percent a year and has promised investors an annual dividend yield of 6-7 percent.

Unlike other investment trusts which invest via marketplace lenders, the Funding Circle vehicle will not charge management fees at the fund level. The only fee it will pay is the platform’s standard 1 percent servicing charge as it will only invest in loans originated by the Funding Circle platform.

Other similar vehicles offer a wider asset base by investing via a number of marketplace lending platforms.

The board is independent with just Funding Circle’s chief executive taking a place, but the vehicle’s mandate is to invest via Funding Circle.
The chairman of CVC Credit Partners’ listed investment trust, Richard Boléat, will also chair the board of Funding Circle SME Income Fund.

“We are delighted with the very positive response to the issue. The success of the issue is a strong endorsement of Funding Circle’s marketplaces, and their focus on small business lending in the UK and the US. We believe that the company can deliver attractive returns to investors, and that the company can successfully grow with the Funding Circle marketplaces,” said Boléat.

Funding Circle SME Income Fund will invest into the platform on the same basis as other investors and will be limited to 35 percent of the assets sourced by the platform, as reported.

Last month, Funding Circle announced a push into continental Europe with the acquisition of Zencap, which has operations in Germany, Spain and the Netherlands.