Peer to Peer lender, Funding Circle has confirmed plans to list on the London Stock exchange in a flotation that it hopes will raise £300m.
The flotation plans were announced at the beginning of September, along with a registration document containing a detailed breakdown of Funding Circle’s current position in the P2P lending market, an analysis of that market and the company’s own expectations for future growth.
At present, Funding Circle operates in four geographies, namely the UK, US, Germany and the Netherlands, and according to figures cited by the company, the SME debt market in those countries is collectively worth £1.2 trillion. In the UK, Funding Circle claims a 1.9% share of that market. However, over all four of the markets, the platform has a market share of 0.5%.
Since its launch in 2010, the Funding Circle platform has channeled loans of around £5bn to 50,000 businesses and as the registration document sets out, much of the company’s growth has taken place over the past year or two, arguably reflecting a much wider trend which has seen growing numbers of SMEs embracing alternative finance platforms as a mainstream means to borrow or raise capital via equity crowdfunding sites. In the year to December 31, 2017, the company posted revenues of £94m, compared with just over £50m a year earlier. However, it is still making a loss, although those losses are narrowing. Looking ahead, Funding Circle is aiming for 40% revenue growth each year and the company’s message to investors is that intends to be the number 1 P2P player in its key markets.
Although positioned as a P2P lender, the bulk of funds available to lend to borrowers are now supplied by institutions (51%). However, accounting for 31% of available funding, retail investors are still an important part of the mix, which also includes Funding Circle’s own SME’s Loan Fund.