FUNDING Circle SME Income fund has issued a prospectus as it looks to issue up to 500 million new shares.
The London-listed investment trust, which invests in loans on the Funding Circle platform, is currently trading on a premium to net asset value (NAV) of 4.3 per cent and has returned 6.2 per cent since its inception in November 2015.
The Funding Circle SME Income fund’s half-year report in November 2016 said its current prospectus was expiring and flagged that it was planning new fundraising this year.
The new prospectus said the share issuance programme, arranged by Numis Securities, may have a number of closing dates so it can issue shares in tranches over a period of time. The fund wants to raise additional capital between 6 February 2017 and 5 February 2018.
“The share issuance programme is intended to satisfy market demand for shares and to raise further money to increase the size of the company and invest in accordance with the investment policy,” said the prospectus.
The actual number of ordinary and C shares is not currently known, but will be announced, and the maximum number should not be taken as an indication of the total amount that will be issued, the document said.
Richard Boleat, chairman of the Funding Circle SME Income fund, said there was healthy demand for the company’s shares.
“As foreshadowed in my statement accompanying the interim financial statements, the company has now published documentation to facilitate its intention to grow through fresh equity issuance during the course of the next year,” he said.
“Demand for the company’s shares is healthy, as evidenced by their current premium to net asset value, and I look forward to making further announcements in due course in respect of specific issuance proposals.”
Selling ordinary shares risks reducing existing shareholder holdings, while a C share provides a separate class that can be merged at a later date.
Outlining options in the prospectus, the investment company said it could offer ordinary shares, subject to permission from current investors, or issue C shares without having to first offer those shares to existing shareholders.
No ordinary shares will be issued at a discount to NAV and the fund will not issue any ordinary shares at a discount of 10 per cent or more to the middle market price without shareholder approval, the prospectus said.
Any C shares will be issued at the price of £1 per share, according to the document.
A spokesperson for Funding Circle declined to comment.