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Funding Circle tumbles as sister fund decides to sell up

Since it listed in 2015, FCIF has returned around 5% a year on average

Funding
Funding Circle will launch a new UK fund and bond

Small business lender Funding Circle Holdings PLC (LON:FCH) took a blow as backers of the fund that invests in its portfolio decided to sell up.

FCIF (Funding Circle SME Income Fund Limited) announced today that shareholders had indicated they want it to stop investing and be wound up in an 'orderly and expeditious fashion'.

READ: Funding Circle reports wider 2018 loss on IPO costs but shares rise on positive outlook

The trust’s remit is to invest in small business loans provided by Funding Circle's platform, though it operates independently.

Since it listed in 2015, FCIF (LON:FCIF) has returned around 5% a year on average.

Shares in Funding Circle dropped 5% on the news, though the SME lender has confirmed it intends to launch a new UK fund and a UK bond to provide additional funding flexibility.

The UK private direct lending fund will look raise more than £200mln from UK institutional investors over the next few years.

Discussions are also underway with the British Business Bank to transfer a £150mln facility from FCIF to launch the UK bond.

Funding Circle added it had broadened its funding sources since 2015 and FCIF was a declining part of its funding mix.

Guidance for 2015 remains unchanged, it added.

Samir Desai, Funding Circle's CEO and co-founder, said: "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.

“However, there are now more appropriate and varied ways for investors to participate on the platform.”

Funding Circle floated at 440p in October but today the shares were changing hands at 325p.

Quick facts: Funding Circle Holdings PLC

Price: 130 GBX

LSE:FCH
Market: LSE
Market Cap: £458.89 m
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