Funding Circle Fund Reduces US Exposure

An investment vehicle operated by U.K. alternative finance platform Funding Circle is reportedly turning away from U.S. exposure and doubling down on local investment through new plans with the British Business Bank (BBB), P2P Finance News reports.

The company’s SME Income Fund (FCIF) is reportedly set to receive additional funding from the BBB in a more formal partnership between the two entities.

The move was detailed in the investment trust’s annual report released last week; according to that release, Funding Circle and the BBB are discussing a project that will provide small business financing via the Funding Circle U.K. lending platform.

Funding Circle said the collaboration would see the BBB provide up to $198 million with FCIF’s junior participation.

Separate reports in AltFi said the move would shift the Funding Circle fund back to the U.K. and cut U.S. holdings by as much as 10 percent. However, the company will want to keep some U.S. exposure on-board to geographically diversify its portfolio.

“The board sees this as an appropriate and proportionate tactical response to its 12 month forward expectations taking into account monetary policy effects,” Funding Circle said in its report.

Rising currency hedging costs have led FCIC to cut its dividend target, reports noted. The company also revealed that some of its investors have urged the fund to focus entirely on the U.K. market.

The move comes as Funding Circle is preparing for what could be a record-setting initial public offering (IPO). Earlier this year, sources said that the company has chosen Bank of America, Goldman Sachs and Numis Corporation to support the float in the U.K. The London Stock Exchange IPO could be the largest float of a FinTech in U.K. history.

Last March, reports said the company hired Bernardo Martinez as its U.S. Managing Director, replacing Sam Hodges, who moved into the position of chairman of Funding Circle USA.