LONDON (Alliance News) - Funding Circle SME Income Fund Ltd, the London-listed closed-ended fund set up to invest in loans originated through Funding Circle, the peer-to-peer lending marketplace, on Friday said it has decided to go ahead with raising equity capital by selling C shares.
Funding Circle SME Income Fund, which earlier in June revealed it was mulling a capital raising, said it continues to receive "encouraging indications of demand" for its shares from prospective investors.
"As is usual in C share offerings, any funds raised will be deployed in a separate pool until the earlier of nine months or at such time as the funds have 90% invested, at which time they would be converted to ordinary shares, thus avoiding the performance drag on the ordinary shares that would otherwise derive from holding a substantial cash position pending investment," Chairman Richard Boleat said in a statement.
"The C shares will be separately listed during the period prior to their conversion to ordinary shares," the chairman said.
Confirmation of Funding Circle SME Income Fund's intention to go ahead with raising capital came as the company reported results for the period from its incorporation on July 22, 2015 to March 31.
Funding Circle SME Income Fund said it has invested more than 85% of its cash in SME loans in the UK, the US and Continental Europe. The company raised GBP150.0 million in its initial public offering on the London Stock Exchange in November 2015.
The loans are producing yields and experiencing delinquency levels in line with those anticipated at the time of the IPO, Boleat said.
Funding Circle SME Income Fund reported a net asset value total return of 0.87% for the period to March 31.
Funding Circle SME Income Fund, which at IPO said it was targeting an annual dividend of between 6.0 pence and 7.0p per share once fully invested, said its performance to date and the projected earnings over the next twelve months enabled it to declare an initial dividend of 1.0p per ordinary share.
The company reiterated that it expects to pay dividends at a rate of 1.5 pence to 1.75p per ordinary share in respect of each subsequent quarter.
"We expect that dividend yield on a cumulative basis will be 6% to 7% based on the current share price. It is our intention to adopt a progressive dividend policy to the extent that the Company's future performance permits," Boleat said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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