Funding Circle SME Income Fund Limited has announced that the company has now entered into a formal agreement with Funding Circle Limited and the European Investment Bank (“EIB”). The EIB will provide a GBP100 million loan to advance credit to UK SME loans via the Funding Circle marketplace. The Company will contribute GBP25 million to the joint enterprise with the EIB.
The transaction is expected to significantly contribute to the Company achieving its target return of 8-9% per annum, once the EIB loan has been fully invested.
The Company also welcomes the opportunity to work alongside the EIB to help satisfy one of their key goals of increasing lending to the real economy by utilising an efficient transmission mechanism for stimulating lending to SME borrowers in the UK through a non-bank source of funding.
Funding Circle SME Income Fund today declares its maiden dividend of 1.00 pence per share payable to ordinary shareholders in July 2016. This payment exceeds the 0.75 pence expected at IPO, due to the strong cash flows from the Company’s portfolio of Credit Assets.
The company reconfirms its intention to pay subsequent quarterly dividends at a rate of 1.5 pence to 1.75 pence, which represents a prospective dividend yield of approximately 6-7% based on the current share price, and to grow the dividend in line with prevailing market conditions.
As the company approaches 90 per cent. of its net IPO proceeds invested, it also announces that it is considering a potential future capital raise, mostly likely in the form of C shares. Any raise will be subject to prevailing market conditions.
FCIF : Funding Circle completes EIB deal