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Funding Circle SME Income Fund Raises £150m




By Ryan Weeks on 25th November 2015


The Funding Circle SME Income Fund has hit its fundraising target, successfully pulling in £150m.

 

The SME Income Fund – the first fund structure to have been launched by a marketplace lending platform – has raised gross proceeds of £150m through an IPO on the London Stock Exchange. Rumour of the fund’s launch first emerged in July, with the platform confirming its intentions in September. The vehicle will provide investors (of a mostly institutional variety) with a diversified exposure to Funding Circle loans in the UK, US and Europe.

 

Funding Circle is reportedly in discussions with the European Investment Bank about securing a financing facility. The SME Income Fund may leverage up to 25% of its assets under management. In September, Funding Circle CEO Samir Desai identified wealth managers, pension funds, mutual funds and asset managers as the fund’s most likely early adopters. These sorts of investors are likely to have supplied the bulk of the £150m.

 

Richard Boléat, Chairman of Funding Circle SME Income Fund Limited, commented on the listing:

 

 “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.”

 

The success of the IPO is an indication of what seems to be a shift in investor appetite. The moderately leveraged, alpha-seeking investment trusts that have to date stood out as the sector’s dominant institutional vehicles may have had their day. Nearly £1.5 billion has been raised by such vehicles through share issues in the UK, but uptake now appears to be slowing. Victory Park Capital’s Specialty Lending Investments recently closed a C Share offering, raising £183m after having initially targeted “at least” £200m. The GLI Alternative Finance fund raised £12.4m in a recent IPO – which again fell short of the intended mark.

 

But the Funding Circle SME Income Fund – a lightly leveraged, low fee, passive investment vehicle (which Samir Desai recently compared to an ETF) – seems to have had no problem pulling in its first £150m. And it’s not the only platform-linked fund out there. LendInvest will soon be launching a similar offering. A window of opportunity for such structures appears to have opened.

 

The Funding Circle SME Income Fund expects for the 150 million newly issued shares to be admitted to the London Stock Exchange for trading at 8am on 30 November 2015. The company’s ticker symbol is FCIF. 

Comments

Ryan Weeks

26 Nov 2015 06:44pm

Fair point "Altfi Man"! Although I'd say that the GLI fund is somewhere between the two models. Low fees, yes, and a focus on SME debt - which also mirrors the SME Income Fund. But on the flip side, the GLI structure invests across a range of platforms, and does so on an active basis, as opposed to Funding Circle's fund, which is a passive vehicle.

Altfi Man

26 Nov 2015 05:19pm

The article is somewhat misleading, the GLI alternative finance fund is also a platform fund like this Funding circle issue, it lends its funds through the platforms in which GLI is invested, it is not like the P2P investments or VPC as you indicate and also charges low fees like this FC fund.

Inside baseball

25 Nov 2015 04:37pm

This deal was tough to pull off. Did not go well.

Ryan Weeks

25 Nov 2015 11:13am

"... the fund will not charge any management or performance fees to investors. However, every investor that signs up to the Funding Circle platform is required to pay a 1% per annum servicing fee – and SME Income Fund investors will be no different." http://www.altfi.com/article/1388_funding_circle_founders_shed_light_on_fund

Mike Baliman

25 Nov 2015 11:11am

Nice clear article Ryan. Epochal move. "Low fees" = ?


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