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Funding Circle fund enters into £50m deal with CitiBank

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

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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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