P2P Global securitises Funding Circle loans – The European Investment Fund and German development bank, KfW will invest in UK small businesses through a securitisation of loans originated by Funding Circle
The £207 million loan portfolio is issued by P2P Global Investments PLC. It is the second securitisation of loans originated by Funding Circle and opens up the small business loan asset class to an even wider range of investors. The transaction was rated by three rating agencies, and its senior tranche was awarded an Aa3 / A (high) / AA- ratings by Moody’s, DBRS and Kroll respectively. On closing, the spread over 1 month Libor on the senior tranche was 75bps which represents a significant tightening from 220bps on the previous securitisation of Funding Circle loans (SBOLT-2016). Deutsche Bank acted as sole lead manager and arranger.
Sachin Patel, Chief Capital Officer, said: “This latest securitisation further validates the attractive, risk-adjusted returns that are being generated for investors in SME loans. Now investors of all shapes and sizes can support the growth of small businesses, which in turn drives much-needed job creation across the UK. This significant commitment by the EIF and KfW, alongside other key investors, will help thousands of small businesses access the finance they need to expand and grow.”
Investors at Funding Circle include 80,000 people, local authorities, the government-owned British Business Bank, the European Investment Bank and financial institutions such as pension and insurance funds. Since launching in 2010, investors have earned an average 6.4% per year after fees and bad debt.
George Passaris, Head of Securitisation at EIF said: “We are pleased to be working again with Funding Circle to boost access to finance for businesses. Many SMEs are still struggling to obtain competitive financing from traditional funding sources and smaller businesses are often the ones most affected. EIF’s participation in these new securitisation, demonstrates our continuous commitment to embracing innovative and pioneering structured finance solutions, allowing SMEs to access to funding to grow their business and ultimately help the economy overall.”
Dr. Frank Czichowski, Treasurer at KfW said: “The second securitisation of SME-loans originated by Funding Circle demonstrates the success of online lending in the UK as well as the functional business model of Funding Circle. Online lending offers great opportunities for SMEs and KfW as a future-oriented bank supports such alternative and innovative funding sources.”
Abror Ismailov, Investment Partner, at Pollen Street Capital said: “We at Pollen Street Capital, the Investment Manager of P2P Global Investments PLC, are business partners as well as capital providers. Our partnership with Funding Circle dates back to 2014 and embodies our aim to work with high-quality specialist businesses. Since the relationship began, P2P Global Investments has issued loans through Funding Circle with original balance of over GBP400 million. We look forward to continuing working with Funding Circle to support small businesses in the UK.”
P2P : P2P Global securitises Funding Circle loans