Shares in small and medium enterprise lender Funding Circle (FCH) jump 5% to 432p after the company unveiled a healthy increase in its loan book in its most recent quarter.

Loans under management at the end of September totalled £2.78bn, a rise of 61% on the same quarter last year, helped by a record 45% increase in originations to £564m.

Funding Circle is the largest of several UK peer-to-peer lending platforms which allow individual investors to back growing small- and mid-sized firms and are disrupting the traditional corporate lending market.

US EXPANSION GATHERING PACE

In a major boost to its US ambitions, Alcentra Group, an alternative fixed-income specialist for BNY Mellon Investment Management, agreed to lend up to $1bn to US small and medium enterprises through Funding Circle’s platform over the next three years.

Funding Circle’s current US loan book is currently around $1bn so the Alcentra deal alone could mean a doubling of assets in the US within three years. Its US lending generates better yields (13% against approximately 10% in the UK) and has a higher projected annual rate of return.

Prior to flotation there were doubts about the company’s valuation but despite its rocky start to life as a publicly-quoted company, the shares have almost returned to their 440p offer price following today’s move.


Issue Date: 19 Oct 2018