Sponsorship group (LSE: FCH) Founder and CEO Samir Desai has acquired 163,017 shares of its company at an average price of £ 0.6201696 per share, according to a filing on the London Stock Exchange (LSE).
Funding Circle went public in 2018 at a price per share of 440 pence with grossing approximately £ 300 million. At that point, the IPO delivered a market cap of around £ 1.5 billion. Today Funding Circle trades for a fraction of that amount with a market capitalization of around £ 265 million.
Last week, Funding Circle released results as of June 30, 2020 showing a loss per share of 33.0 pence (H1 2019 loss: 8.9 pence).
“We set up Funding Circle after the financial crisis to help small businesses access finance, and we are proud to have approved more than £ 2 billion in loans since we were accredited in government guarantee programs for SMEs in the UK and US and the 5th largest CBILS lender with a market share of approximately 20% of the approved loans. In the first half of the year we increased total revenue 24% to £ 101.2 million and improved free cash flow to minus £ 9.6 million. AEBITDA declined mainly due to the impact of Covid-19 on the investments we held for sale. We continue to focus on profitable growth and reaffirm our goal of nearing the AEBITDA break-even for the business in the second half of 2020 are increasingly drawn to the unique Funding Circle model, which offers quick and affordable access to finance with excellent customer service offers. Our instant loan decision-making technology introduced this year is already changing the way we borrow money for SMEs, as average loan applications are completed in 6 minutes and decisions are made in 9 seconds. Our advanced data-driven credit rating and the measures we have taken protect investor returns – after applying our core Covid-19 stress scenario, we expect all cohorts in the UK to deliver positive annualized returns to investors. “
Similar to many other fintech lenders, COVID has impacted Funding Circle’s performance. The company said it saw an initial spike in missed payments from its borrowers, but that metric has now dropped to pre-COVID levels and 90% of UK borrowers are now making payments. Lending totaled £ 662 million, a 17% decrease from the first half of 2019, reflecting the two-month period in which fewer lending were made.
The company said the effects of COVID indicate “a lasting change in the SMB credit market that we believe will benefit Funding Circle”.
Long-term low interest rates are expected to attract strong demand from institutional investors for financing SME loans.