Funding Circle to raise £300m through IPO

The peer-to-peer firm will publish a Registration Document later today.

After some eight months of speculation, Funding Circle has confirmed its plan to stage a landmark listing on the London Stock Exchange.

The firm hopes to raise around £300m at a maximum valuation of £1.65bn. Heartland A/S, the private holding company of Anders Holch Povlsen, has agreed to backstop the IPO with a purchase order for 10 per cent of the issued shares. Heartland is a major investor in companies like ASOS and Zalando. 

Funding Circle will publish a Registration Document later today.

The platform is a first mover in the peer-to-peer business lending market, with operations in the UK, US, Germany and the Netherlands. It has facilitated more than £5bn in loans to over 50,000 small businesses to date, with more than £1bn coming in the first half of 2018 alone.

Funding Circle’s CEO and co-founder Samir Desai (pictured, middle) commented: “At Funding Circle our mission is to build a better financial world. Today’s announcement is the start of the next stage in our exciting and transformational journey. Over the last eight years, we have worked hard to build a platform that is number one in every market we operate in. By combining cutting-edge technology with our own proprietary credit models and sophisticated data analytics, we deliver a better deal for small businesses and investors around the world. I am very proud of the team and culture we have created at Funding Circle, both of which have been integral to our success to date”.

Over the weekend, Funding Circle announced that it had secured a $1bn lending deal with Alcentra, a global asset management firm owned by BNY Mellon.

The road to its IPO began in January this year, when Sky News reported the firm was lining up banks to assist with a listing. In June, Funding Circle withdrew its public loanbook in favour of a refreshed analytics page on its website.

In its announcement this morning, Funding Circle said the total SME debt lending market across its core geographies stands at £1.2 trillion. It currently owns a 1.9 per cent share of the addressable market in the UK and less than 0.5 per cent across all four of its geographies taken together.

In the year ended 31 December 2017, Funding Circle posted revenues of £94.5 million, compared to £50.9 million in the previous year. In its 2016 full year results, published September last year, the company narrowed its losses to £35.7m, down from £36.9m in the in the previous year.  

In the medium term, Funding Circle is targeting 40 per cent revenue growth, with a longer term target of adjusted EBITDA margins of 35 per cent of more.