FUNDING Circle’s dedicated investment trust is set to close as the peer-to-peer business lender unveils two new institutional funds to back loans on the platform.
The Funding Circle SME Income Fund (FCIF) said in an announcement this morning (5 April) that shareholders had backed plans to cease investment in new assets and that the process of returning capital to investors would begin.
FCIF, which launched in 2015, said it will convene an extraordinary general meeting where shareholders can consider an orderly winding down of the company.
It comes as the investment trust has been hit by hedging costs and the impact of new IFRS accountancy reporting requirements.
The fund is believed to have gradually represented less investment on the Funding Circle platform in recent years as it has attracted other institutional backers.
Following the announcement, Samir Desai (pictured), chief executive of Funding Circle, said the platform is set to launch two new institutional products in the UK.
This includes a UK private direct lending fund, structured in a similar way to the recently launched continental Europe private direct lending fund.
It intends to raise more than £200m from UK institutional investors over the next few years.
Funding Circle will also launch a UK bond product and is in discussions with the British Business Bank to use the £150m it previously provided FCIF.
“A global income fund providing access to a diversified portfolio of Funding Circle small business loans was the right strategy for investors and Funding Circle in 2015,” Desai said.
“However, there are now more appropriate and varied ways for investors to participate on the platform. We’re pleased to soon introduce two new investor products to the UK market.
“They will further expand the universe of investors that can access loans on our platform and continue to diversify our sources of funding, in line with the strategy we set out at initial public offering.”
The move means the only way for a retail investor to invest in Funding Circle is by purchasing shares in the company, or separately you could back the small business loans by lending through its P2P platform.