GLI Finance has agreed to acquire FundingKnight for £750k.
GLI and FundingKnight parted ways in February of this year, when the new GLI management team – spearheaded by CEO Andrew Whelan – opted to stop funding loans through the platform. Greg Palfrey and Steve Adshead of Smith & Williamson LLP were appointed as administrators to FundingKnight today. Shortly after the appointment, GLI agreed to acquire the respective entire issued share capitals of Funding Knight Limited and its subsidiaries, Funding Knight Services Limited and Funding Knight Corporate Services Limited. As part of the terms of the acquisition, GLI has also committed to supplying a minimum of £1m in extra cash to FundingKnight, to help with its ongoing operations.
Despite the two companies’ divorce in February, GLI has remained a passive investor in relation to its outstanding interests in the platform. These include a 23.4% stake in Funding Knight Holdings’ issued ordinary share capital, with a carrying value of £2.481m and a £1.001m investment in the company’s preference share capital. These interests are coupled with accrued interest on the preference shares of £290k, and £525k in loans provided to FundingKnight by GLI. £450k of the FundingKnight price tag will be applied by Smith & Williamson in partial settlement of the GLI loan. The remainder of GLI’s interests in the platform will be marked down to £nil on the company’s balance sheet.
FundingKnight recorded turnover and post-tax loss figures for the financial year ended 31 March 2016 of £610k and £1.17m respectively. The platform’s net assets as of 31 March 2016 were worth around £130k. According to AltFi Data, FundingKnight's origination volume has faltered this year with only £2.02m originated in the first six months of 2016, compared to £9.18m in the same period in 2015.
This is the next phase in the development of the new-look GLI, which has thus far involved bringing various GLI assets into Sancus Group. Both BMS and Platform Black were effectively absorbed by Sancus in May.
Commenting on the acquisition of FundingKnight, GLI CEO Andy Whelan said: “We believe FundingKnight is a fundamentally good business with strategic value. By acquiring the business at a low entry price, we will help secure the continued employment of the FundingKnight team and provide reassurance to the investors in FundingKnight loans and FundingKnight's SME client base that have existing loans or are seeking to borrow. In the medium term, we will be seeking to maximise the potential of FundingKnight in a way which is consistent with our strategic plans."
Join AltFi at their fourth annual Australasia Summit to examine the future of lending in Australia. Where we present best practices across, technology, partnerships, open banking, governance, data access, consumer experience, capital markets & funding, the role of government and regulation.