Funding Circle makes lacklustre $2 billion London debut in test of demand

By Dasha Afanasieva

LONDON (Reuters) - Funding Circle struggled to shine on its 1.5 billion pound ($2 billion) market debut on Friday as the British peer-to-peer lending platform tested investor appetite for both large listings and financial technology firms.

Although shares in the company backed with a 150 million pound investment by Danish billionaire Anders Holch Povlsen initially rose, they slipped during morning trading to below their launch price of 440 pence per share.

Funding Circle, which was launched in 2010, is the first of Britain's new breed of peer-to-peer financial technology firms to launch an initial public offering (IPO) and the flotation is being closely watched as an indicator of investor demand.

The IPO, which valued Funding Circle at around 1.5 billion pounds, is expected to help to set the tone for a string of large listings in Europe.

London is seen as one of Europe's financial technology hubs and bankers have been eagerly eyeing the flotation of firms such as money transfer service Transferwise - a challenger to banks which charge high fees for sending money abroad.

Based on its offering size and pricing, which was set at the bottom end of the 420-530 pence per share range set originally by the company and its advisers, Funding Circle raised around 440 million pounds on the London Stock Exchange.

While the stock opened in London at 460 pence per share, it then slipped and was trading at 439 pence at 0922 GMT.

'INVESTOR DIALOGUE'

Funding Circle's online lending platform enables investors including banks, asset managers, insurers, government-backed entities and funds to lend to small and medium-sized businesses in Britain, the United States, Germany and the Netherlands.

The company said that in the six months to the end of June it had an adjusted loss before interest, tax, depreciation and amortisation of 16.3 million pounds on revenue of 63 million pounds.

Funding Circle's flotation is a boost to the London Stock Exchange, which has been looking to attract large technology firms for whom New York is often more enticing because of its track record of technology floats.

Cyber security firm Avast traded lower when it went public in May 2018, while Alfa Financial, which provides software for the asset finance industry, rose sharply on its May 2017 listing.

A banker working on Funding Circle's debut said the deal would set the tone for others:

"Once you get to three or four, it begins to be a track record and it opens a dialogue with investors."

($1 = 0.7655 pounds)

(Reporting by Dasha Afanasieva; Editing by David Goodman and Alexander Smith)