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LONDON (Alliance News) - Funding Circle Holdings PLC on Friday said it supports Funding Circle SME Income Fund Ltd's decision to cease investment in new credit assets and start a process to return capital to shareholders as it winds down.
Funding Circle Holdings is a FTSE 250-listed loans platform which connects investors to businesses looking for finance.
Funding Circle SME Income Fund holds a portfolio of small business loans which come from the Funding Circle Holdings platform.
Funding Circle SME plans to hold an extraordinary general meeting in the future where shareholders will vote on whether to wind down the company, which would lead to its assets being realised and not reinvested.
Funding Circle SME said the decision followed consultation with around two-thirds of its shareholders.
In response to the announcement, Funding Circle Holdings said that Funding Circle SME had become a "declining part of its overall funding mix", as the group started to expand its range of funding sources and become more international in nature.
For 2019, Funding Circle SME was estimated to fund only 3.5% of Funding Circle Holdings's origination volume.
In addition, Funding Circle Holdings said it would be introducing two new products, one of which is a UK private direct lending fund that will raise around GBP200 million from UK investors over the next few years.
The second product is a UK bond, for which Funding Circle Holdings is in discussions with the British Business Bank to transfer the GBP150 million facility from Funding Circle SME to the group, for use as a bond in 2019.
Also, Funding Circle Holdings said its 2019 guidance remains unchanged, with revenue expected above GBP200 million and segment-adjusted earnings before interest, taxes, depreciation and amortisation to double from 2018's GBP7.0 million.
"A global income fund providing access to a diversified portfolio of Funding Circle small business loans was the right strategy for investors and Funding Circle in 2015. However, there are now more appropriate and varied ways for investors to participate on the platform," said Samir Desai, chief executive officer of Funding Circle Holdings.
"We're pleased to soon introduce two new investor products to the UK market. They will further expand the universe of investors that can access loans on our platform and continue to diversify our sources of funding, in line with the strategy we set out at IPO," Desai added.
