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Deal watch: Magic Circle scoops £300m Funding Circle IPO as Linklaters advises on £2bn wind farm financing

Freshfields Bruckhaus Deringer and Linklaters have scored lead mandates on the proposed initial public offering (IPO) of small business lender Funding Circle, while Linklaters advised on the £2bn financing of the Triton Knoll wind farm.

London-based start-up Funding Circle, which provides a loan platform for SMEs in the UK, US, Germany and the Netherlands, announced today (3 September) its intention to issue at least 25% of its share capital to raise around £300m.

Freshfields, led by capital markets partners Mark Austin and Doug Smith, are acting for Funding Circle, while Linklaters’ corporate partner John Lane and capital markets partner Pam Shores are advising joint co-ordinators and bookrunners Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Numis Securities.

Funding Circle was founded in 2010 and has since lent more than £5bn of loans, of which more than £1bn was lent in the first half of 2018. The company has opened up small business lending as an investment asset class to a range of investors including retail, banks, asset management companies, insurance companies, government-backed entities and funds.

Projected investor returns for loans originated in 2017 are expected to range between 4.6%-7.6% across Funding Circle’s geographies, while the company recorded revenue of £94.5m for the year ended 31 December 2017: an 86% uptick on the £50.9m it reported in 2016.

Freshfields’ Mark Austin told Legal Business that the IPO was another shot in the arm for the London listing market, coming so soon after last week’s announcement that upmarket car maker Aston Martin was planning to float.

‘Tech companies planning IPOs can go over to New York, so it’s a good thing that this great home-grown company, which will be another tech unicorn listing, has chosen London instead.’

This is the second London float to be announced since new rules governing IPOs were brought into force on 1 July 2018, requiring unconnected analysts to be involved in the transaction and for the registration document to be published before the prospectus.

While the market is relatively buoyant at present, few advisers are expecting deal activity to continue strongly into next year.

Noted one corporate partner: ‘These deals are great for London considering the geopolitical situation at the moment with Brexit, but I think H1 2019 will be quieter. I can’t see investors flocking when there’s so much uncertainty.’
Meanwhile, Linklaters acted as the adviser to the sponsors of the 860MW Triton Knoll offshore wind farm which last Friday (31 August) made it over the line on a financial close that will see £2bn injected into the UK project.

The Linklaters team was led by partners Richard Coar and John Pickett. The firm also recently advised Innogy Renewables UK on a deal to sell a total 41% of its interest in the project to a subsidiary of Electric Power Development, J-Power (25%), and to a subsidiary of Kansai Electric Power (16%).

A consortium of 15 banks is set to provide £1.71bn of debt for the wind farm, which will be built off the coast of Lincolnshire.

The lenders are: ABN AMRO Bank, Banco Santander, Bayersische Landesbank, BNP Paribas, Commerzbank Aktiengesellschaft, ING Bank, KfW IPEX-Bank, Landesbank Baden-Württemberg, Landesbank Hessen Thuringen Girozentrale, Lloyds Bank, MUFG Bank, National Westminster Bank, Natixis, Skandinaviska Enskilda Banken, Sumitomo Mitsui Banking Corporation.

MUFG also acted as financial adviser on the deal.

Coar commented: ‘The success of Triton Knoll clearly demonstrates that the appetite of both global equity investors and commercial banks in the UK offshore wind sector remains strong. There is a healthy portfolio of both greenfield and brownfield offshore wind assets in the UK and across the rest of Europe and the ability of the sector to continue to attract both existing and new classes of capital at increasingly competitive rates will be key to its continued success.’