03 July 2019
The £232m transaction is the fourth and largest ever securitisation facilitated through the Funding Circle platform - Today’s announcement comes three months after the last securitisation of Funding Circle loans, bringing the total amount of loans securitised to £755m.
The transaction was rated by two rating agencies, and its senior tranche was awarded an Aa3 / AA ratings by Moody’s and S&P respectively.
On closing, the spread over 1-month Libor on the senior tranche was 120 basis points.
The securitisation forms part of Waterfall Asset Management’s £1 billion investment in Funding Circle loans announced at the end of last year. This commitment will support the growth of approximately 14,000 small businesses*, creating and sustaining thousands of new jobs across the UK**.
The £232m deal is further recognition of the online lending model’s ability to open up deep pools of capital to small businesses, creating more choice and competition in the small business lending market. In turn this creates a more stable ecosystem and reduces dependency on bank lending, as recommended by the Bank of England and European Central Bank.
Sachin Patel, Chief Capital Officer at Funding Circle, said:
This latest securitisation is further proof that no matter what type of investor you are - from an individual with £1,000 to an asset manager with £1 billion - lending through Funding Circle can provide attractive, risk-adjusted returns.
We look forward to continuing to work with Waterfall to support the growth of small businesses across the UK. SMEs play a crucial role in society by driving economic growth and employment, and remain at the heart of what we do every day.
Henrik Malmer, Managing Director at Waterfall, said:
We are pleased to see our investment through Funding Circle reach one of its key milestones with this securitisation. The transaction marks another positive step for the Funding Circle platform.
Launched in 2010, Funding Circle is helping to spark a global revolution in the way small businesses access finance, disrupting the traditional model of banking. To date, Funding Circle investors have lent £7.5 billion to more than 70,000 businesses in the UK, US, Germany and the Netherlands. By bringing together industry-leading risk management and cutting-edge technology, creditworthy businesses typically access the capital they need to grow in days rather than months.
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Notes to editor
*Estimate based on average UK loan size of £70,000.
**Research by Oxford Economics found that Funding Circle loans outstanding at the end of 2018 created and sustained 115,000 jobs in the UK, US, Germany and the Netherlands.
About Funding Circle
Funding Circle (LSE: FCH) is a global SME loans platform, connecting SMEs who want to borrow with investors who want to lend in the UK, US, Germany and the Netherlands. Since launching in 2010, investors across Funding Circle’s geographies - including more than 90,000 retail investors, banks, asset management companies, insurance companies, government-backed entities and funds - have lent more than £7.5 billion to over 70,000 businesses globally. Funding Circle is a member of the FTSE 250 Index.
About Waterfall Asset Management
Waterfall is an institutional asset manager. Waterfall is an SEC-registered investment adviser focused on High Yield Asset Backed Security (ABS) and loan investments. Waterfall was founded in 2005 by Tom Capasse and Jack Ross, two individuals who were early leaders of the ABS industry, and who have 50+ combined years of ABS/Loan trading, banking and servicing experience. Capasse and Ross started the ABS Group at Merrill Lynch in the 1980s and conducted the first ABS issuances for many of the more than 40+ ABS sectors in which Waterfall invests. Waterfall has approximately $8.5 billion in assets under management (as of May 1, 2019).