The world’s leading marketplace lending platform for SMEs has acquired the Rocket Internet-backed operator Zencap. Zencap's website has been rebranded and will now trade as Funding Circle enabling Funding Circle to roll out its services in Germany, Spain and the Netherlands. The platform is thus declaring itself the world’s first truly global marketplace – covering the UK, US and continental Europe.
Funding Circle deems the European opportunity as juicier than both the UK and US markets combined, with over €1 trillion of outstanding loans for small businesses. The platform's expansion was also likely driven by the comparative lack of alternative financing activity on the continent. Cumulative lending for the entire P2P business lending sector in Europe currently stands at €150m, according to the Liberum AltFi Volume Index Continental Europe. Funding Circle has now assumed Europe’s second largest lender in Zencap, which has lent €34m since launching in March 2014. The largest European player is Geldvoorelkaar, which has lent a little under €70m to date. Funding Circle has an opportunity to quickly establish itself as a major force on the continent. As Cormac Leech declared at today’s LendIt Europe Conference:
“Europe is where the tremendous growth opportunity is. We’re currently at only 0.1% of the addressable market in Europe.”
Zencap Founders Matthias Knecht and Christian Grobe will continue to lead the business under its new guise. Zencap recently secured a €230m debt investment from the alternative asset manager Victory Park Capital (VPC). That relationship will stand, as VPC is also a partner to Funding Circle.
Rumours first surfaced about this acquisition in September, but both companies declined to comment at the time. Funding Circle raised a whopping $150m in a Series E round in April. Even after the acquisition of Zencap (the price of which has not been disclosed), Samir Desai today suggested that Funding Circle continues to hold around half of the c. $300m in equity capital that has been raised to date on its balance sheet. Funding Circle now intends to dominate SME lending in 5 global markets. The company employs around 450 employees around the world and is aiming to lend $120m a month.
“Our vision is to help millions of businesses across the world sidestep the outdated and inefficient banking system and borrow from investors. Today’s news is the next exciting stage of this journey. 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.”
“Our companies share one common mission: to create a better financial world. Today’s announcement sees us become a truly global player under the strong Funding Circle brand, allowing us to leverage synergies, professionalize processes and grow even faster. This is exciting news for millions of business owners in Europe and thousands of investors who will substantially benefit from these advantages in the short and medium term.”
This is the first major piece of M&A activity that we have seen in the marketplace lending sphere. We very much doubt that it will be the last.