Funding Circle Shares (LON: FCH) Hit Multi Year High – US Market Exit Deal

Funding Circle shares (LON: FCH) bounced in the early part of trading, at one point hitting a round 100p and setting new multi year highs. Having gained almost 15% early, some of the gains have been given back through the day, but the share price gain of almost 6% leading into the final part of the day remains impressive.

In a significant development, the UK-based peer-to-peer lending platform, has finalised the sale of its US operations. The company confirmed the sale of its US arm to iBusiness Funding, a part of Ready Capital Corporation, based in Florida, for £33 million. This strategic move comes as Funding Circle aims to streamline its business model and curb the escalating losses it has incurred in recent years.

The decision to offload its US division to iBusiness Funding is a part of Funding Circle's broader strategy to simplify the company's operations and financial structure. The sale follows a pattern of increasing losses for Funding Circle, which reported nearly £13 million in 2022 that expanded to £33 million the following year.

This exit from the US market is part of a cost-cutting drive that saw the company announce a reduction of 120 jobs last month. Moreover, the Chief Financial Officer (CFO) of Funding Circle also stepped down amidst these structural changes.

Since its debut on the London Stock Stock Exchange in 2018, Funding Circle has seen its share value take a tumble, dropping by 78%. However, in the wake of the announcement regarding the sale, the company's shares experienced a notable rebound.

Despite the challenges, CEO Lisa Jacobs has expressed optimism about the company's prospects in the UK. She conveyed expectations that the UK business is on track to become profitable in the second half of the year. This sentiment suggests that the divestment of the US operations could pave the way for a stronger focus on the UK market, where Funding Circle has its roots and potentially a more stable client base.

Funding Circle's transition reflects the ongoing restructuring within the fintech industry, where companies are increasingly seeking to optimise their resources in the face of regulatory, operational, and competitive pressures. As the landscape continues to evolve, such strategic divestitures may become a common approach for fintechs aiming to achieve sustainability and profitability in their core markets.