Funding Circle looks to offload US arm and kicks off share buyback as losses deepen

Fintech firm Funding Circle kicked off a £25m share buyback programme today and said it was looking to offload its loss-making US division in the hope of stemming losses and boosting its flagging share, the firm has announced.

Alongside its full-year results this morning, the London-listed small business lender said it would begin buying up its own shares and had also received “indications of interest” in its US arm which had plunged it deeper into a loss over the past year.

Losses at the group widened to £33.2m in 2023, up from a pre-tax loss of £12.9m the previous year, after a push into the US and investment into its lend-now-pay-later offer Flexipay.

The firm has been expanding into the US in recent years but said it will now double down on its profitable UK business and mull a sale of the US arm.

“Whilst the US business offers attractive long term growth, it also requires a significant amount of cash and capital to grow the SBA proposition and we don’t believe that this is the best course of action for the Group,” said Lisa Jacobs, chief executive. “We have received indications of interest for the US business and will update further in due course.” 

She added that the company would now be focused on its UK business, made up of its UK Loans and FlexiPay, and took aim at the firm’s flagging share price which has cratered since 2018. Funding Circle has shed more than 93 per cent of its value after floating at a valuation of around £1.5bn in 2018.

“We believe the share price materially undervalues the business and as such will be buying back up to £25m shares,” she added.

The update has sent shares surging some 22 per cent in early trading today.

Funding Circle saw its overall loans under management fall to £3.3bn last year, down from £3.7bn, the previous year as firms paid off government-backed borrowing dished out through the pandemic. The company’s FlexiPay offer almost quadrupled to £234m from £59m in 2022.