Funding Circle SME Income Fund to raise cash amid strong demand

Funding Circle SME Income Fund, a close-ended investment company, announced it had already deployed the majority of its assets and said it would raise cash via the sale of C shares in response to encouraging demand from prospective investors.

The Fund said that as of 24 June it had invested over 85% of its assets in 1,245 small to medium enterprise (SME) loans in the UK, US and continental Europe.

In November, the Fund listed on the London Stock Exchange and raised £150m in its initial public offering (IPO).

The Fund had generated asset value total return of 0.87% for the year ending 31 March 2016, with net asset value per share excluding income standing at 98.0p.

It was targeting an annual dividend of between 6p and 7p per share once invested completely. The Fund declared an initial dividend of 1p per ordinary share.

Dividends were expected to run at a rate of between 1.5p to 1.75p per ordinary share per quarter for each three-month period going forward.

Chairman Richard Boléat said: “We expect that dividend yield on a cumulative basis will be 6% to 7% based on the current share price. It is our intention to adopt a progressive dividend policy to the extent that the Company's future performance permits."

Boléat said the company had received "encouraging indications of demand" for its shares from potential investors.

“As is usual in C share offerings, any funds raised will be deployed in a separate pool until the earlier of nine months or at such time as the funds have 90% invested, at which time they would be converted to ordinary shares, thus avoiding the performance drag on the ordinary shares that would otherwise derive from holding a substantial cash position pending investment.

Boléat added: "The C shares will be separately listed during the period prior to their conversion to ordinary shares.”

As of 16:23 BST the shares were flat at 98.0p.