GLI FINANCE has announced it will close its loss-making peer-to-peer supply chain finance platform, blaming worsening market conditions and a £1.1m hit from an insolvent borrower.
The Aim-listed alternative finance group said on Friday that Sancus Finance is set to report a £1m operating loss.
“The group believes the market for supply chain finance has changed significantly, with credit insurers reducing appetite to write cover and increasing premiums markedly,” said GLI Finance in a stock market announcement.
“In light of this, and recognising the difficult market conditions facing supply chain finance more generally, the group has taken the decision to close its supply chain finance offering.”
GLI Finance added that the group has a £1.1m exposure to a supply chain finance borrower which recently went into administration and this will be recognised in its full-year results.
Despite the performance of Sancus Finance, GLI Finance said that its lending division – Sancus BMS – is expected to report a 28 per cent year-on-year rise in revenues to £13m in its latest annual results.
Sancus BMS generated record loan originations of approximately £168m in 2018, representing a 21 per cent increase from the previous year.
GLI Finance said that Sancus BMS’s remaining operations in the UK – which include P2P lender Sancus Funding – will continue to provide education funding and asset backed lending.
The firm also announced that it expects more writedowns in its fintech investments arm, named Fintech Ventures.
“It has recently become apparent that several of the platforms are finding it harder to raise further capital at the valuation levels previously expected,” said GLI Finance.
“Those that successfully raised further capital in 2018 are better placed to execute on their long-term business plans but this has, in some cases, resulted in a significant dilution for GLI.”
GLI warned last April that the growth rates of some of its investments had been slower than expected but hoped that equity fundraising rounds would boost the portfolio.
GLI’s shares were down by more than a fifth in early trading.