European Investment Fund and German development bank, KfW, invest in first securitisation of marketplace loans in Europe
29 Apr 2016
- The European Investment Fund, part of the European Investment Bank Group, and KfW, the government-backed German Promotional Bank, are supporting small businesses in the UK through their investment in the securitisation of loans originated across the Funding Circle marketplace.
- This transaction is the first of its kind across Europe, opening up small business lending as an asset class to an even wider range of investors. It increases lending to small businesses in the real economy and reduces their dependency on bank lending, as recommended by the Bank of England and the European Central Bank.*
- Since launching, Funding Circle has worked with both local and national governments, and a wide range of institutional investors. Today’s news is a natural evolution of this, and demonstrates the EIF and KfW’s commitment to small businesses in Europe.
- Small businesses in the UK make up 50% of GDP and 60% of employment.** By linking supply directly with demand through Funding Circle’s marketplace, much needed funding is provided to the real economy.
- To date, Funding Circle has facilitated $2.2 billion to businesses globally, and the marketplace is one of the largest net lenders to small businesses in the UK.
George Passaris, Head of Securitisation at the European Investment Fund said: “Small businesses across the UK will benefit from the European Investment Fund’s significant new support for Funding Circle, one of the UK’s largest peer-to-peer platforms. The EIF is pleased to work alongside KfW on the first securitisation transaction in Europe to support alternative financing of SME’s that will help Funding Circle provide more loans to small and medium-sized businesses. This new engagement demonstrates the European Investment Fund’s firm commitment to help companies across Europe and across the UK to expand, create jobs and explore new opportunities.”
Rita Geyermann, Head of Asset Management at KfW said: “Investing in securitisation transactions backed by SME exposures in Europe has become one of our promotional objectives in order to support the availability of finance to SMEs. By investing in this innovative transaction in cooperation with the EIF, we are convinced we can stimulate SME lending via capital markets in the UK.”
Sachin Patel, Global Co-Head of Capital Markets at Funding Circle said: “This landmark transaction is the first of its kind. The investment by KfW, with the support of the EIF, marks the next step in our journey to open up a traditional fixed income asset class to new types of investors for the first time. We’re committed to building the infrastructure where any investor, big or small, can lend to small businesses across the world.”
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Notes to editor
Funding Circle (www.fundingcircle.com) is the world’s leading online marketplace for business loans, matching small businesses who want to borrow with investors who want to lend in the UK, US and Europe. Since launching in 2010, investors at Funding Circle – including 50,000 individuals, financial institutions and the UK Government – have now invested more than $2.2 billion in 17,000 businesses. Funding Circle was the first marketplace to announce a formal referral partnership with Santander, one of the UK’s leading high street banks, and has since announced a similar partnership with RBS. It has raised $273m in equity capital from the same investors that backed Facebook, Twitter and Airbnb.