Funding Circle throws in the towel – in a surprise move, Funding Circle SME Income Fund has announced that it will wind up.
“Following consultation with shareholders accounting for over two thirds of the register, the board hereby acknowledges their preference to cease investment in new credit assets and commence a process to return capital in an orderly and expeditious fashion with the objective of optimising returns to shareholders.
Accordingly, the board shall shortly publish a circular convening an extraordinary general meeting at which shareholders will be invited to consider an orderly winding down of the company. This would involve the company’s portfolio being realised and not reinvested, with a corresponding change being made to the company’s investment policy. Further details will be provided as soon as possible.
Funding Circle has reaffirmed its willingness to support the board so as to effect the best outcome for the company’s shareholders.”
[QD comment: the online lending funds have been unpopular for some time and RDL realisation is, as its new name suggests, already in the throes of liquidating its portfolio and handing back cash to investors. Funding Circle SME Income Fund seemed like it might be one of the survivors. However, its share price suddenly fell off a cliff in November last year – dropping from around 102p to a low of just above 80p in the run up to Christmas. Broker, Liberum, downgraded its rating for Funding Circle SME Income Fund in November, down to what it said were to high operating costs, dividend cut and US loss rates. It was the interim results released on 18 December that put the nail in the coffin, however. The chairman acknowledged that loans made in 2016 and 2017 were going sour as young businesses went into insolvency. The company started buying back substantial numbers of shares.]
FCIF : Funding Circle throws in the towel