Funding Circle fund enters into £50m deal with CitiBank

By Daniel Lanyon on Wednesday 17 January 2018

Alternative Lending

The investment trust has been in growth mode in the past 12 months, raising money through new share issuance.

The Funding Circle SME Income Fund has entered into a formal agreement with Citibank to establish a funding transaction to make loans to ‎UK small businesses through the Funding Circle platform‎.

The transaction will serve to support the investment trust’s target dividend yield of 6-7 per cent per annum, Funding Circle said.

Under the terms of the agreement Citibank London will provide £50m of funding into the transaction, by entering into a senior, floating rate loan.

The fund will contribute a portfolio of existing UK small business loans at par, and in return shall receive ‎the approximately £50m of cash to be deployed in accordance with its investment policy, and junior notes.

Richard Boleat, the chairman of the closed-ended portfolio, said: "We are very pleased to be able to complete this transaction on attractive terms with Citibank London, having received financing proposals from a number of parties.”

“The senior facility will be fully drawn on closing of the transaction, and the Company's leverage ratio, on a "look through" basis, will be approximately 49%, consistent with the Board's approved leverage limit of 50," he added.

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