THE FUNDING Circle SME Income Fund is considering a potential equity raise as it assesses its growth options.
“With the company’s portfolio now substantially invested, the board is evaluating growth options which may include a potential equity raise,” said the London-listed fund, which invests in loans on the Funding Circle platform.
Any issue of shares or sale from treasury would be priced at NAV plus a premium to cover all issue costs, the fund said in a stock exchange announcement on Monday.
Analysts at brokerage Numis welcomed the announcement and said that the fund remains its “favoured play in the sector”.
“We believe it has an attractive fee structure with no management or performance fees at the fund level,” said Numis in a note.
“In addition, we have been impressed by Funding Circle’s credit process, which uses technology to make the review by human underwriters more efficient.”
The fund also confirmed that it is now using the new IFRS 9 accounting standards, which would result in a one-off decrease in its NAV of between 0.8 per cent and 1.5 per cent.
The fund currently has net assets of £301m, after raising £150m at IPO in December 2015. and its shares were trading at 104.5p at 12.30 GMT.
Numis said that the fund has delivered a “consistent performance since launch”, with NAV total returns of 6.5 per cent per year. It pays quarterly dividends of 1.625p, in-line with its target of 6-7p per year.
The fund’s shares are currently trading at 104.5p, a five per cent premium to the March NAV.