(“Funding Circle” or the “Company” or the “Group”)
Completion of the process to concentrate on the UK business
Agreement reached with iBusiness Funding to acquire Funding Circle’s US business
LONDON, 24 June 2024 /PRNewswire/ — Following the announcement on March 7, 2024Funding Circle today announced that it has entered into an agreement to sell Funding Circle’s U.S. business to iBusiness Funding, LLC (IBF).
The transaction will involve a total cash consideration of £33 million[1] [2]for the US business including all loan portfolios, representing a gain of £10 million before transaction costs. The proceeds of the transaction will be reviewed in line with our capital allocation framework.
Lisa JacobsCEO of Funding Circle, said “In March, I announced that we would simplify the business by exiting the US and focusing on profitable growth in the UK business. In addition to the restructuring measures in the UK announced in May, we are continuing to execute on this plan with the sale of the US business to IBF. The UK business is on track to be profitable in the second half of the year, which is in line with our forecasts. Over the medium term, we expect net profit growth of 15-20% on average per year with PBT margins of >15%.
Over the past decade, our U.S. team has played a significant role in financing America’s small businesses, and I want to thank them for their commitment to our clients. We are pleased to have found a partner that shares our mission in IBF, one of the leading loan processors for small and medium-sized businesses, and we look forward to seeing the combined company’s success in originating SBA loans to businesses across the U.S.”
IBF is a leading provider of credit solutions for banks and lenders of all sizes, specializing in SBA loans. The company’s mission is to streamline the business lending process so lenders can efficiently provide capital to small and medium-sized businesses. IBF has over 6 billion US dollars in SBA loans to date, and the team processes over 1,000 business loan applications daily through its platform. It is a wholly owned subsidiary of Ready Capital Corporation (NYSE: RC).
Justin LevyCEO of IBF, said: “We are excited to have Funding Circle US join IBF. Over the past 10 years, Funding Circle US has made a significant contribution to supporting small US 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 small US businesses with highly flexible and efficient financing solutions.”
Since Ready Capital Group already holds an SBLC license, Funding Circle has surrendered its SBLC license with the approval of the SBA. The transaction is expected to be completed by the end of June.
Funding Circle will announce its first half 2024 results on 5 September 2024.
Contacts:
Support group:
Investor Relations: ir@fundingcircle.com
Tony Nicol
Media contact: press@fundingcircle.com
Angeli Everitt
Headland Consulting +44 (0) 20 3805 4822
Michael Smith / Stephen Malthouse
press@fundingcircle.com
About Funding Circle:
Funding Circle (LSE: FCH) is the UK’s leading SME lending platform. Its mission is to create a place where small businesses can get the finance they need to succeed. Funding Circle enables small businesses to access finance and offers an unrivalled customer experience powered by data and technology. For institutional investors, Funding Circle offers access to an alternative asset class in an underserved market with robust and attractive returns. Globally, Funding Circle has provided over £16 billion in loans to around 150,000 businesses.
About iBusiness Funding:
IBF is a leading provider of credit solutions for banks and lenders of all sizes, specializing in SBA loans. The company’s mission is to streamline the business lending process so lenders can efficiently provide capital to small and medium-sized businesses. IBF has over 6 billion US dollars of SBA loans and the team processes more than 1,000 business loan applications daily through its platform.
[1] The total cash amount is subject to adjustment of net assets at closing.
[2] The transaction represents a Class 2 transaction under the UK Listing Rules. Funding Circle US had December 31, 2023The US business contributed losses of £(23)m to the Group in 2023, but reported a statutory profit before tax of £7m for the financial year December 31, 2023.