Funding Circle IPO will set the tone for future P2P market valuations

FUNDING Circle’s stock market debut is predicted to influence the pricing of future peer-to-peer initial public offerings (IPOs).

The P2P business lender floated on the main market of the London Stock Exchange on 3 October after closing its £300m IPO at the end of September and entering conditional dealing at 440p per share with a valuation of £1.5bn.

But its share price fell to as low as 334p on its first day before rallying closer 385p later in the afternoon and closing at 355p.

Read more: Funding Circle originations hit record high

Other recent IPOs, such as Aston Martin, have had a similarly shaky start, with analysts suggesting that macro-economic concerns and Brexit jitters have made investors cautious.

Funding Circle’s price has slowly climbed during October, but Helal Miah, research analyst for The Share Centre said pricing is key to a successful first day of trading.

“Funding Circle was slightly high on the valuation side,” Miah said.

“Zopa and RateSetter should be paying attention to this.

“If they are planning on listing, they will want their share price to rise on the first day rather than fall.

“If they can have a competitive price  then it gives much  more confidence in  the company.”

Fellow ‘big three’ P2P lenders Zopa and RateSetter have both previously signalled their intentions to go public.

Last month, Finnish P2P lender Fellow Finance made its stock market debut on the Nasdaq First North Finland marketplace at €7.90 (£6.95) per share, falling to €7.45 during its first day of trading but going above €8 per share later in the month.

This article featured in the November issue of Peer2Peer Finance News, now available to read online.