Irish fintech firm Future Finance blames UK economic outlook as it braces for solvent downturn

In accounts filed with the Companies Registration Office, Future Finance stated that its majority shareholder KCK, a US investment fund, is “no longer willing” to invest in the company in the long term.

“Measures have been taken to reduce costs, and the expectation is that there will be an orderly solution to winding down the business,” the documentation states.

“The boards have engaged an investment banker to carry out a process to sell the loan book. If the sale of the loan book is successful, the directors will intend to liquidate the company.”

The company, which had raised more than $480 million from investors, said it expected to close a sale of its loan book in the coming months, but “uncertainty remains as to the final amount to be realized from the sale”.

According to the accounts, Future Finance had a loan portfolio worth £74.9m in 2021, compared to £79.3m in 2020, with the decline attributed to “capital constraints”.

It has stopped signing new business in the UK.

A £15m credit facility was secured in late 2021 which has since been closed and repaid.

“Despite his unwillingness to invest long-term in the business, the majority shareholder recognizes that there is value in the company and continues to support FFLC [Future Finance] while it explores options to either sell or liquidate the business to realize this value, it said.

Future Finance and Tony Ettinger, a senior executive at KCK who was named CEO of Future Finance in March, did not respond to requests for comment.

For the year ending December 2021, Future Finance booked £11.1m in income from interest on its loans. This was down from £12 million the previous year. Loss after tax in 2021 was £13.7m, which was down from £21.2m in 2020.

Future Finance employs 64 people in its Irish operations, the accounts show. It also has staff in the UK and US – but a redundancy process in the UK has already seen the number of staff there reduced from 71 to 36.

Since it was founded nearly 10 years ago, Future Finance has raised more than $480 million in equity and debt financing from several major investment firms.

The company’s backers include Blackstone, Fenway Summer Ventures, S-Cubed Capital and DW Healthcare Partners.

In its last major funding round to be announced, S-Cubed Capital invested 20 million euros in the company in 2019.

The company was founded in Dublin in 2013 by American entrepreneurs Brian Norton and Vishal Garg. It operated mostly in the UK, where it offered loans to students and undergraduates.

Although it no longer guarantees loans, it is still authorized by the Financial Conduct Authority in the UK.

However, the company stated that it has surrendered its license from the Central Bank of Ireland.

It had previously indicated plans to offer loans in other markets, including Ireland, and had once established a subsidiary in Germany.

The account also cited the “deteriorating economic outlook” as a reason for the challenges, including the current state of the UK economy, rising interest rates, inflation and the war in Ukraine.

“Russia’s invasion of Ukraine is likely to weigh on activity by intensifying current inflationary pressures on consumers and businesses, and also increasing bottlenecks in global supply chains,” it said.

It noted that the company had largely mitigated the risk of the UK leaving the EU.

The founders of Future Finance left the company a number of years ago.

Brian Norton started a similar business, Supply Finance, which lends to small and medium-sized businesses, while Vishal Garg is now the CEO of Better.com, a mortgage company based in the US.