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Peer2Peer Finance News | June 27, 2019

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Funding Circle fund begins shift from US loans

Funding Circle fund begins shift from US loans
Marc Shoffman

FUNDING Circle’s dedicated investment trust expects its US exposure to fall to 22 per cent over the next two months as it continues its migration to focus more on UK and European loans.

A July update from the Funding Circle SME Income Fund (FCIF) showed its US exposure is currently at 25 per cent, while 65 per cent of the portfolio is invested in the UK and seven per cent in continental Europe.

It comes after FCIF announced last month that it would reallocate funds from the US to the UK and continental Europe due to increased currency hedging costs.

The latest stock market update showed FCIF’s net asset value (NAV) returns returned to growth in July, up 0.4 per cent. The NAV had fallen in June after a revision to how a structured finance transaction with Citibank was recorded in the portfolio.

FCIF also revealed that it has already drawn the additional £16m from its extended Citibank facility, which will be put towards loans in the UK and continental Europe.

The Citibank deal was first announced in January and indirectly channels funds to small businesses through the Funding Circle platform.

Under a rather complicated structured finance deal, Citibank’s London branch advances a senior, floating rate loan through Irish special purpose vehicles.

The fund is currently trading on a premium to NAV of 3.6 per cent.