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Peer2Peer Finance News | November 16, 2018

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Funding Circle confirms more details of IPO

Funding Circle confirms more details of IPO
Emily Perryman

FUNDING Circle has unveiled more details of its plan to raise £300m through a listing on the London Stock Exchange’s main market in October.

The peer-to-peer lending platform said retail investors will be able to apply for shares via intermediaries such as Hargreaves Lansdown, AJ Bell Youinvest and The Share Centre, with a minimum application size of £1,000.

It had previously indicated that its existing customers would have the opportunity to participate in the initial public offering (IPO), which marks the first public float of a UK P2P lending platform.

Funding Circle said it will use the proceeds to enhance its balance sheet position, thereby boosting trust among investors, borrowers and regulators; supporting its intention of pursuing growth over profitability in the medium term; and enabling it to take advantage of opportunities in current markets or new geographies.

“The directors believe that this is an appropriate time to bring the group to the public market, reflecting the robust foundations established for future growth,” the company said.

It added that the IPO will increase Funding Circle’s profile and brand awareness; demonstrate the maturity, transparency and governance of the business; assist in recruiting, retaining and incentivising key management and employees; and give the group access to a wider range of capital-raising options.

Funding Circle finally confirmed its IPO plans last week, after months of speculation. It said it would publish a registration document setting out its plans and that Danish billionaire Anders Holch Povlsen has agreed to buy 10 per cent of the share capital through his investment vehicle Heartland A/S, as long as the valuation does not exceed £1.65bn.

Merrill Lynch, Goldman Sachs and Morgan Stanley are acting as joint global co-ordinators and joint bookrunners on the offer, Funding Circle said, and Numis Securities is acting as joint bookrunner. BofA Merrill Lynch is acting as sole sponsor.

The full list of approved intermediaries are: AJ Bell Youinvest; Albert E Sharp; Barclays Smart Investor; Cornhill Capital Limited; Hargreaves Lansdown; iDealing.com;  IG Group; Interactive Investor; Redmayne-Bentley Stockbrokers; Saga Share Direct; Selftrade; Sharedeal Active; Shareview; SVS Securities Plc; The Share Centre; WH Ireland; and X-O.co.uk.

Read more: Ask the experts: What impact will Funding Circle’s IPO have on the industry?

Greg Carter, chief executive of P2P business finance provider Growth Street, said Funding Circle’s intent to IPO is a vote of confidence in the alternative finance sector as a whole.

“In the last couple of years, Funding Circle has channelled more capital to small- and medium-sized enterprises than all the big banks put together. This shows the potential of new funding models, but I think it should also serve as a wake-up call to the big banks who have drawn back from SME lending since the financial crisis,” he said.

Funding Circle recently announced that Alcentra, a global asset management firm owned by The Bank of New York Mellon Corporation, had agreed to lend $1bn (£775m) to small businesses through its US platform.