Funding Circle plans to raise £300m in IPO
Small-business lending platform Funding Circle has officially announced its plan to raise £300 million as part of its £1.65 billion IPO on the London Stock Exchange.
As reported in January, Funding Circle was seeking advisors for the IPO. At that time, existing investors said the firm could hit a £2 billion valuation once it goes public.
In the latest plan, Heartland, the private holding company of Anders Holch Povlsen (an investor in companies such as ASOS and Zalando), has confirmed that it will participate as a “cornerstone” investor in any such listing and has agreed to purchase 10% of the issued ordinary share capital up to a maximum valuation of £1.65 billion.
In addition, Alcentra, an asset management firm owned by The Bank of New York Mellon Corporation, recently agreed to lend $1 billion to small businesses through Funding Circle’s platform in the US over the next few years.
Funding Circle offers SME loans in the UK, US, Germany and the Netherlands. It launched in 2010.
According to the company, it has facilitated more than £5 billion in loans to over 50,000 SMEs from 80,000 investors – including over £1 billion in the first half of 2018.
The firm uses proprietary credit models and data analytics, and borrowers can complete an initial application in “minutes” and “typically” receive a decision within 24 hours in the UK and US.
It has been making progress. Its revenue in the year ended 31 December 2017 was £94.5 million, compared to £50.9 million in the year ended 31 December 2016.
In addition, revenue grew to £63 million in H1 2018, compared to £40.9 million in H1 2017.
Funding Circle says it is targeting in excess of 40% revenue growth in the medium term and longer term adjusted EBITDA margins of 35% or above.