It was a landmark day for fintech in London as Funding Circle became the first UK marketplace lender to complete an IPO. The company raised £300 million at a valuation of around £1.5 billion. They began trading on the London Stock Exchange (LSE: FCH) this morning with an initial price of 440 pence (at the lower end of the forecasted price range of 420p to 530p). While rising early in the day to 460p it closed the exactly flat at 440p.
While you couldn’t call that a blockbuster first day it wasn’t too bad and we have learned from the experience of LendingClub and OnDeck in the US that a great first day really means nothing as to the long term prospects for the share price.
Funding Circle has become a force in small business lending in the UK. In 2017 they were the largest net lender to small businesses in the UK surpassing even the largest banks. They also have substantial lending operations in the US, Germany and the Netherlands with total lending to date over $7 billion globally. They have made it clear that they intend to continue to expand their geographic footprint as time goes on. There is no other lender in all of marketplace lending that has such a large international business outside their home country.
Here is what CEO Samir Desai said in an official statement today:
We have always believed Funding Circle would be well-suited to the public markets and today’s listing is recognition of the strength and global impact of our model. We look forward to starting this exciting new chapter for the business as we focus on growth across all markets and seek to create a better financial world for small businesses and investors. I am pleased to welcome our new shareholders and I would like to thank my fellow Circlers for all their hard work since we launched. Funding Circle is a very ambitious company and we are excited to continue growing our business over the coming years. The UK is a great place to start and grow a fintech business and we are proud to have listed on London Stock Exchange today.
Everyone in the UK fintech industry is watching this IPO closely. Other leading companies like Zopa, LendInvest and Ratesetter have all indicated they would like to go public at some point. How Funding Circle does as a public company will be a significant factor in the timing of any future IPOs.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.