Online lending platform Funding Circle announced on Thursday the launch of its first direct lending private fund focused on German and Dutch small businesses. According to Funding Circle, The Funding Circle European SME Direct Lending Fund I (European SME Fund) provides institutional investors including pension funds and insurance companies the opportunity to invest in a highly diversified portfolio of small to mid-sized SME loans while supporting the growth of small businesses in Germany and the Netherlands.
“The eight-year closed-ended structure is Funding Circle’s first Euro-denominated fund and aims to raise at least €200 million over the next 18 months. Two Finnish insurance companies alongside Funding Circle have committed an initial €40 million in total.”
While sharing more details about the fund, Sachin Patel, Chief Capital Officer at Funding Circle, stated:
“We are very pleased to be giving more investors access to the small business segment of the private debt market. This is the first time that investors can invest in German and Dutch SME lending through a closed-ended fund. The portfolio is a highly diversified pool of loans with an attractive risk-return profile. We look forward to providing more investors with the ability to access our strong loan origination capabilities in Europe.”
Panni Morshedi, Managing Director Continental Europe at Funding Circle, also commented:
“We are very excited that the new private fund will enable us to provide SMEs with much-needed finance for years to come while further diversifying our investor base. Small businesses are the backbone of the Dutch and German economy and have proven to be resilient through economic cycles. Supporting them, means investing in economic growth and supporting job creation in local communities.”
Funding Circle went on to explain that the fund is expected to ensure a stable committed long term capital and support the growth of approximately 5,000 small businesses, creating and sustaining thousands of new jobs in Germany and the Netherlands over the next years. The platform added:
“By opening up its SME loans portfolio to even more European investors with the new structure, Funding Circle further diversifies its investor base which today includes 90,000 individuals globally, the European Investment Bank, the British Business Bank, and other financial institutions, including pension funds, banks, asset managers and insurance companies.”