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Market newcomer Funding Circle see shares flop | Market newcomer Funding Circle see shares flop |
(35 minutes later) | |
Shares in Funding Circle, the financial technology firm, have tumbled in the first day of full trading on the London Stock Exchange. | Shares in Funding Circle, the financial technology firm, have tumbled in the first day of full trading on the London Stock Exchange. |
They fell as much as 24% from the float price of 440p before recovering slightly to trade at about 364p. | |
Analysts say the flotation may have overpriced the firm. | |
Funding Circle draws on a pool of funds collected from individuals and firms, which is then lent to small businesses vetted by the company. | |
Because it cuts out banks, Funding Circle was billed as a disruptive force in lending. | Because it cuts out banks, Funding Circle was billed as a disruptive force in lending. |
It offers loans to small businesses in the UK, the US, Germany and the Netherlands. | |
High price | |
Helal Miah, an investment research analyst at the Share Centre, said shares have fallen because the initial valuation of £1.5bn, was too high. | |
He also pointed out that marketing spending is equal to 40% of revenues - a high ratio. | |
That, coupled with sparse financial data about the firm, would be likely to make investors wary, he added. | |
Funding Circle is the first such lender to float on the London stock market. | |
It said the stock market listing would help "engender trust" with investors, borrowers and regulators. | |
The venture, which was founded in London in August 2010, plans to use the money raised on the stock market to expand into new markets. | The venture, which was founded in London in August 2010, plans to use the money raised on the stock market to expand into new markets. |