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Funding Circle replaces loan book, possible IPO

The UK-headquartered P2P business lender is replacing its loan book with an upgraded statistics page. This will transition the company to quarterly reporting, and the page will contain information regarding funded companies, returns, and lending volumes. Funding Circle says it is taking down its loan book because it is downloaded infrequently – less than 0.3% of investors downloaded it in May – and it is an inefficient manner to monitor performance.

The new statistics page will specifically include the following tabs: loans under management; returns; lifetime default rate by cohort; and a breakdown of borrowers according to sector and location. With the new page, investors can see protected annual returns as a range and as time progresses and returns begin to manifest, this range will give way to actual returns.

AltFi Data will verify the quarterly data. If they find it to be inaccurate, they will withdraw their support. This will be the first time Funding Circle has used a third party for data verification, and the company says that using this means increases transparency for investors.

Investors will still be able to access and view loan-by-loan information breakdowns for their portfolios by logging in to their accounts, but they will no longer be able to view information on loans they are not involved in.

In the P2P lending industry, companies, since they are not putting their own funds on the line, have released loan books for investors to keep tabs on the loans distributed by their businesses. This effort for transparency has been taken up by many lending platforms.

Funding Circle’s move comes a few days after the UK’s Peer-to-Peer Finance Association (P2PFA), which Funding Circle and Zopa founded in 2011, released a revision of its Operating Principle 3.5 on June 4th. Previous to the revision, P2PFA members were required to make loan books available to investors for download. With the revision, members have the option of releasing the entire loan book or give a detailed rendering of the loans in their loan book. This, according to the revision, will “enable a consumer to be informed about the nature and number of loans of different descriptions presently originated through the platform,” in line with yet-to-be-approved rules by the P2PFA Board.

Rumours are circulating that Funding Circle could be launching an IPO, and the move to the new statistics page could be seen as a step in preparation for this occasion because, as alternative finance news site Altfi writes, “It would be difficult to for the firm to continue publishing information on loan book on a daily basis” while gearing up for an IPO.

By Elliot Lyons, Research Analyst

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