Funding Circle inks £700m forward flow agreement with Waterfall AM

Funding Circle has agreed a £700m forward flow agreement with Waterfall Asset Management to boost its capacity for small- and medium-sized enterprise (SME) lending in the UK.

Senior financing is being provided by Citi to support the transaction.

Waterfall, an asset-backed finance focused manager, is also purchasing a £120m existing loan portfolio as part of the agreement.

Funding Circle said that this transition from balance sheet to institutional funding aligns with its strategy to test and iterate new propositions on balance sheet, before scaling them with partners once the research and development phase is complete.

Waterfall first partnered with the London-listed SME lender in 2018 and last year it surpassed £3bn in total lending through Funding Circle’s platform.

“Expanding partnerships is a powerful endorsement of our credit underwriting, and capital markets expertise, and we are proud to once again build on that with this transaction,” said Dipesh Mehta, chief capital officer at Funding Circle.

“Waterfall has been a consistent supporter of our platform, and this transaction with Citibank is a result of our shared commitment to finding innovative ways to optimise credit. This significant forward flow deal ensures we can continue to provide UK small businesses with the fast, flexible funding they need to win.”

James Cuby, head of Europe at Waterfall Asset Management, said: “We are pleased to deepen our relationship with Funding Circle through this substantial new commitment. Having worked together for many years, we remain confident in Funding Circle’s technology and credit assessment capabilities. This transaction allows us to further support the UK SME market while achieving our strategic investment goals.”

Sebastian Walf, managing director at Citi, said: “Citi is pleased to provide senior financing for this £700m transaction, supporting this latest funding agreement between Funding Circle and Waterfall Asset Management.”