GLI Finance will no longer fund loans through the FundingKnight platform.
The split is first major bit of fallout from former GLI CEO Geoff Miller’s departure. Former Sancus boss Andrew Whelan is now interim CEO at GLI Finance. We learnt at the breaking of this shake-up that the company would move forwards with a dual focus on reducing cost of capital and providing greater support to a select number of its portfolio platforms. The implicit implication was that some of those portfolio platforms would be left by the wayside.
FundingKnight posted an update on the divorce, stating that the two companies had identified “some clear differences” in their approach to strategic development. GLI has contributed an undisclosed proportion of FundingKnight’s lending capital to date. As such, the platform is now in active discussions with “a number of parties” in relation to plugging the gap left by GLI's departure. FundingKnight has alluded to a strong pipeline of demand on the borrower side, which will of course require capital to satisfy.
The FundingKnight board is stepping in with an equity investment in order to cover the platform’s short-term working capital requirements. GLI remains an important shareholder, with a 24% stake in the platform and “substantial” exposure to FundingKnight’s loan book.
Though the general outlook from the FundingKnight team has been upbeat, we have been warned that the withdrawal of the GLI funding line may cause “a short-term reduction in loans being offered on the platform”. That note of caution suggests that the GLI funding line represented a significant part of FundingKnight’s capital mix.
The platform doubled AltFi Data’s origination prediction in 2015, lending a grand total of £19m on the year. We’ll keep an eye on the platform’s origination flows over the coming months.