Samir Desai’s Funding Circle to axe over 100 jobs

LONDON-based Funding Circle has said that it will axe over 100 jobs at its European business.

The latest move by the peer-to-peer lender has come as it aims to touch breakeven and win back the confidence of its shareholders.

The company, founded by Samir Desai, 36, will axe 150 jobs in Germany and the Netherlands but will employ an additional 25 people in the British capital to serve its European operation.

The lender’s plans for a restructuring is expected to cost £5 million, but it would help it reach profitability quickly, chief executive officer Desai said.

European businesses accounted for eight per cent of its revenues but 60 per cent of its losses, Desai noted.

Funding Circle, started in 2009, is scaling back its operations in the Netherlands and Germany, where it will also stop offering peer-to-peer loans.

However, the firm will act as an online broker between companies and banks in the two countries.

It failed to become a profitable business in the two countries following the prevalence of state-supported lenders and negative interest rates.

The London listed firm has lost 90 per cent of its value since its £1.5 billion flotation in 2018.

The lending business was set up by Desai and two friends from the University of Oxford.

It pools investors’ cash to provide loans to small and medium-sized companies. The company earns a fee on each loan it generates.

Desai’s business recorded a loss before taxation and exceptional costs of £49.9m in the year ended in December last year when compared to £45m in 2018.

Loss before taxation of £84.2m (£50.9m) was recorded last year, including a non-cash exceptional write-down of £34.3m of goodwill and intangible assets related to the developing markets.

The British business of the firm delivered an operating profit of £3m in the second half of 2019.

The UK business represents around 65 per cent of group revenue compared to the US business following a similar trajectory.

Funding Circle has lent more than £8bn to 77,000 businesses globally.