Funding Circle sells US operations to iBusiness Funding for £33m

In a significant move in the financial sector, Funding Circle has agreed to sell its US operations to iBusiness Funding, LLC (IBF) for a total cash consideration of £33 million. This deal includes all US loan portfolios, realizing a £10 million gain before transaction costs. The sale aligns with Funding Circle’s strategic shift to concentrate on its profitable UK sector, as announced by CEO Lisa Jacobs earlier this year.

Lisa Jacobs, CEO of Funding Circle, remarked on the strategic reorientation, “In March, I announced that we were simplifying the business by exiting the US and focusing on profitable growth in the UK business.” She added, “The UK business is on track to be profitable in H2, in line with our guidance. Over the medium term we expect net income growth of 15-20% CAGR with PBT margins of >15%.”

This sale is part of a broader restructuring plan, with significant UK business adjustments announced in May. Funding Circle aims to enhance its financial standing and focus intensively on its core UK market, expecting substantial growth and profitability in the coming periods.

On the other side of the transaction, iBusiness Funding, a subsidiary of Ready Capital Corporation (NYSE: RC), is a leading entity in SBA lending and business loan processing. IBF processes over 1,000 business loan applications daily and has handled more than $6 billion in SBA loans. Justin Levy, CEO of IBF, expressed enthusiasm about the acquisition, stating, “We are delighted for Funding Circle US to become part of IBF. Together we will be able to accelerate progress to help even more businesses.”

The integration of Funding Circle’s US business into IBF’s operations is anticipated to bolster the latter’s capacity to serve American small businesses more efficiently. The transaction, set to close by the end of June, marks a pivotal development in the small business lending landscape.

As Funding Circle focuses on its UK operations and IBF expands its reach in the US, both companies are poised for future growth. This strategic acquisition is expected to enhance the offerings to small businesses in the US, driving forward both companies’ missions to support economic growth and business success.

The sale of Funding Circle’s US operations to iBusiness Funding could signify a strengthening trend in the financial sector, where companies streamline their operations to focus on core profitable areas. This move could set a precedent for similar strategic decisions in the industry, emphasizing profitability and operational efficiency.