Funding Circle launches its first European private debt fund

04 July 2019

Funding Circle Holdings plc (“Funding Circle”), the leading small business loans platform in the UK, US, Germany and the Netherlands, announces the launch of its first direct lending private fund focused on German and Dutch small businesses. The Funding Circle European SME Direct Lending Fund I (“European SME Fund”) provides institutional investors including pension funds and insurance companies the opportunity to invest in a highly diversified portfolio of small to mid-sized SME loans while supporting the growth of small businesses in Germany and the Netherlands.

The eight-year closed-ended structure is Funding Circle’s first Euro-denominated fund and aims to raise at least €200 million over the next 18 months. Two Finnish insurance companies alongside Funding Circle have committed an initial €40 million in total.

By investing in SME loans originated on the Funding Circle platform, the European SME Fund is a new way for investors to access German and Dutch SME assets. Traditionally, direct lending funds have focused on the middle market, often for leveraged buyouts, with loans typically ranging between €50 million and €250 million[1]. In comparison, small business loans through Funding Circle are to established small businesses trading around 15 years and accessing an average of €60,000[2] in finance.

Funding Circle uses cutting-edge technology to originate loans via an online marketplace, avoiding lengthy deployment periods and giving certainty to investors on asset deployment. The fund gives investors the ability to stay fully invested over the entire investment period with target annualized net returns of 5.5 - 6.5 percent[3].

Sachin Patel, Chief Capital Officer at Funding Circle, said: “We are very pleased to be giving more investors access to the small business segment of the private debt market. This is the first time that investors can invest in German and Dutch SME lending through a closed-ended fund. The portfolio is a highly diversified pool of loans with an attractive risk-return profile. We look forward to providing more investors with the ability to access our strong loan origination capabilities in Europe.”

Panni Morshedi, Managing Director Continental Europe at Funding Circle, said: “We are very excited that the new private fund will enable us to provide SMEs with much-needed finance for years to come while further diversifying our investor base. Small businesses are the backbone of the Dutch and German economy and have proven to be resilient through economic cycles. Supporting them, means investing in economic growth and supporting job creation in local communities.”

The fund is expected to ensure a stable committed long term capital and support the growth of approximately 5,000 small businesses[4], creating and sustaining thousands of new jobs in Germany and the Netherlands[5] over the next years. By opening up its SME loans portfolio to even more European investors with the new structure, Funding Circle further diversifies its investor base which today includes 90,000 individuals globally, the European Investment Bank, the British Business Bank, and other financial institutions, including pension funds, banks, asset managers and insurance companies.

ENDS    

For further information, please contact:

UK: press@fundingcircle.com / +44 (0) 20 3667 2245

DE: presse@fundingcircle.com / +49 (0)30 726 169 199

NL: pers@fundingcircle.nl / +31 (0)20 708 58 35   

About Funding Circle

Funding Circle (www.fundingcircle.com) is a global small business loans platform, matching small businesses 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 over €8 billion to more than 68,000 businesses globally.

 


[1] Ares Market Insights, Opportunities in Global Direct Lending, https://www.aresmgmt.com/media/458997/2018-Direct-Lending-White-Paper_vF-3-.pdf.

[2] Based on an av. loan size of €40,000 in The Netherlands and €80,000 in Germany.

[3] After fees, losses, and recoveries.

[4] Estimate based on average loan size across Germany and The Netherlands of €60,000.

[5] 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.

 

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