Agreement reached with iBusiness Funding to acquire Funding Circle's US business

Funding Circle Holdings plc

(“Funding Circle” or the “Company” or the “Group”)

Completion of process to focus on UK business.

Agreement reached with iBusiness Funding to acquire Funding Circle’s US business.

Further to the announcement on 7 March 2024, Funding Circle today announces it has entered into an agreement for the sale of Funding Circle’s US business to iBusiness Funding, LLC (IBF).  
The transaction will be for a total cash consideration of £33m[1] [2], for the US business including all loan portfolios, which includes a £10m gain, before transaction costs.  The proceeds from the transaction will be reviewed in line with our capital allocation framework.

Lisa Jacobs, Funding Circle CEO, said “In March, I announced that we were simplifying the business by exiting the US and focusing on profitable growth in the UK business. Alongside the UK restructuring actions announced in May, we are continuing to execute against this plan with the sale of the US business to IBF. The UK business is on track to be profitable in H2, in line with our guidance. Over the medium term we expect net income growth of 15-20% CAGR with PBT margins of >15%.

Over the last decade, our US team has played a significant role in getting finance to America’s small businesses and I want to thank them for all the commitment that they have shown to our customers. We are pleased that in IBF, one of the leading SMB loan processors, we have found a partner that shares in our mission and we look forward to seeing the success of the combined entity in issuing SBA loans to businesses across the US.”

IBF is a leading provider of lending solutions for banks and lenders of all sizes with a specialisation in SBA lending. The company is dedicated to streamlining the business lending process to allow lenders to efficiently deliver capital to small and medium-sized businesses. IBF has processed over $6 billion in SBA loans to date, and the team processes over 1,000 business loan applications through its platform daily. It is a wholly owned subsidiary of Ready Capital Corporation (NYSE: RC).

Justin Levy, IBF CEO, said: “We are delighted for Funding Circle US to become part of IBF. Over the last 10 years, Funding Circle US has made a significant contribution to supporting US small businesses and together we will be able to accelerate progress to help even more businesses. We look forward to welcoming the team and continuing the important work of providing highly flexible and efficient funding solutions to US small businesses.”

As the Ready Capital group already holds an SBLC license, Funding Circle has, with SBA consent, surrendered its SBLC license.  The transaction is expected to close by the end of June.

 

---

[1] Total cash consideration subject to net asset adjustment at closing.

[2] The Transaction constitutes a Class 2 transaction under the UK Listing Rules. Funding Circle US had gross assets of £89m as at 31 December 2023. The US business contributed losses of £(23)m to the overall Group in 2023, although reported a statutory profit before tax of £7m for the year ended 31 December 2023.