Funding Circle sells US arm for £33m to focus on UK
Funding Circle has sold off its US business to iBusiness Funding (IBF) for £33m.
The London-listed SME lender had revealed its plans to offload the division in March, after its latest annual results showed a wider loss on a group level despite a “strong profit” in UK loans.
Funding Circle US had gross assets of £89m as of the end of last year. It contributed £23m of losses to the overall group in its latest annual results.
“In March, I announced that we were simplifying the business by exiting the US and focusing on profitable growth in the UK business,” said Lisa Jacobs (pictured), chief executive of Funding Circle.
Read more: Funding Circle granted small business lending licence in the US
“Alongside the UK restructuring actions announced in May, we are continuing to execute against this plan with the sale of the US business to IBF. The UK business is on track to be profitable in the second half, in line with our guidance. Over the medium term we expect net income growth of 15-20 per cent CAGR with PBT margins of >15 per cent.”
IBF is a US business lender with a specialisation in Small Business Administration (SBA) lending, whereby the loans are guaranteed by the government. It has processed over $6bn in SBA loans to date.
“We are delighted for Funding Circle US to become part of IBF,” said Justin Levy, chief executive of IBF.
Read more: Funding Circle’s losses widen despite UK profit
“Over the last 10 years, Funding Circle US has made a significant contribution to supporting US small businesses and together we will be able to accelerate progress to help even more businesses. We look forward to welcoming the team and continuing the important work of providing highly flexible and efficient funding solutions to US small businesses.”
The £33m sale price for Funding Circle US includes all loan portfolios, which includes a £10m gain before transaction costs. The deal is expected to close this month.
