Funding Circle fund plans potential £500m cash raise

The investment trust, which invests exclusively in Funding Circle’s loans, is looking to a new year-long share issuance programme.

The £348m Funding Circle SME Income Fund has published a prospectus ahead of a new share issuance programme that could see the listed portfolio raise up to another £500m in the next 12 months.

Set out in the prospectus, the fund is looking to raise more money to be deployed across the Funding Circle peer-to-peer lending platform, potentially in both Ordinary Shares and/or C Shares by way of a twelve month share issuance programme.

Numis Securities is acting as sole sponsor in relation to the publication of the prospectus and global coordinator and bookrunner in relation to the share issuance programme.

The prospectus says: “If the Share Issuance Programme is fully utilised and assuming the Shares (for these purposes being only Ordinary Shares) are issued at a price of 100 pence during the life of the Share Issuance Programme, the gross proceeds of the Share Issuance Programme, would be approximately £500 million and the net proceeds of the Share Issuance Programme (assuming that expenses are 1.5 per cent. of the gross proceeds of the Placings, in aggregate) would be approximately £492.5 million. The expenses of each Placing under the Share Issuance Programme will be met out of the gross proceeds of the relevant Placing”.

As one of a group of investment trusts - closed ended funds listed on the London Stock Exchange and therefore open to both institutional and retail investors - that buys loan assets from digital lending platforms, the Funding Circle SME Income Fund has been one of the most consistent.

Launched in December 2015, it has been a consistent performer in terms of its dividend payouts and net asset value's discount/premium movements. Although, it recently announced a likely dividend cut in the third quarter of the year owing to increased hedging cost and the amortisation of its funding line from the European Investment Bank.

Its largest investors are Invesco Perpetual (27.51 per cent), Railways Pension Investment (24.69 per cent). BlackRock (15.19 per cent), Standard Life Aberdeen (5.19 per cent) and SG Kleinwort Hambros Bank (5.11 per cent).