trending Market Intelligence /marketintelligence/en/news-insights/trending/NGhVTW2h35UAaTYSm2ywuA2 content esgSubNav
In This List

Funding Circle IPO a sign of the times for peer-to-peer lending


Private Markets 360° | Episode 8: Powering the Global Private Markets (with Adam Kansler of S&P Global Market Intelligence)


Kensho Launches Word Error Rate Calculator


Insight Weekly: Bank oversight steps up; auto insurers’ dismal year; VC investment slumps


Bank failures: The importance of liquidity and funding data

Funding Circle IPO a sign of the times for peer-to-peer lending

Funding Circle Holdings Ltd.'s planned £300 million IPO is symbolic of a burgeoning peer-to-peer lending market and will allow the company to tap opportunities in existing and new markets.

The London company, a peer-to-peer lending platform for small and medium-sized enterprises in the U.K., U.S., Germany and the Netherlands, plans to list on the London Stock Exchange. Created in 2010, it had about £2.5 billion in loans under management as of the end of June.

The company said the funds will allow it to prioritize growth over profitability in the medium term. It made a loss of £27 million in the six months to the end of June 2018, compared with a loss of £19.2 million during the same period in 2017.

But it is bullish on opportunities to grow its loan book, with a potential market of an estimated £470 billion for SME lending in the four countries where it is already active, according to a statement.

"Although Funding Circle has grown rapidly, it still accounts for only a fraction of the share of its current markets, with a 1.9% share of the addressable market in the U.K. and less than 0.5% share across all four of its geographies taken together as at 31 December 2017," it said.

Funding Circle's IPO plans are a sign of a maturing peer-to-peer market, according to Julia Groves, partner and head of crowdfunding at Downing LLP, a London-based investment manager and platform.

"Funding Circle's announcement, long trailed in the industry, is another indicator that P2P and crowd lending are here to stay," she said in an email. "This is now a mainstream form of finance, with more than two million people in the U.K. backing projects and businesses, and over £4 billion a year being raised just in the lending market. I have no doubt that in a few years' time MBA students globally will have Funding Circle on their list of case studies."

Funding Circle is the largest lender in the U.K. peer-to-peer market on the basis of total cumulative lending — that is, the total amount of loans lent to companies since the platform was established — having facilitated £3.09 billion of loans between its 2010 launch and the end of 2017, according to data from the Peer-to-Peer Finance Association, a U.K. industry body.

It is followed by consumer-focused platform Zopa Ltd., which has facilitated £2.91 billion of loans since its 2004 launch, and invoice finance specialist MarketInvoice Ltd., with £1.37 billion of cumulative lending since its 2011 launch. Total cumulative lending in the U.K. as of end-2017 stood at just over £8 billion.