Online peer-to-peer lending platform Funding Circle is reportedly set to make an Initial Public Offering (IPO) in London in the coming months at a valuation as high as £2bn ($2.6bn). The company, which matches lenders with small businesses, was founded in 2010 by Samir Desai, Andrew Mullinger and James Meekings.

The platform has arranged £4.5bn ($6bn) in loans for SMEs in the UK, US, Germany and the Netherlands, with numbers growing fast: £1.26m in loans were facilitate in 2017 alone.

$2 billion - Potential Funding Circle valuation at IPO

Funding Circle is one of the UK’s few unicorns (tech companies valued over $1bn). The platform became the fifth highest funded tech company in the UK in January 2017, when it’s total funding reached over $400m. Funding Circle says those that have provided loans through the platform have earned an average annual net return of 6.4% since 2010.

With many fintech players set to float globally this year, some have warned of over-generous funding-round valuations, particularly for those, like Funding Circle, that offer platforms rather than true new technology. The firm was valued at just £1bn ($1.3bn) a year ago.

“£2bn for a business generating only something around £100m of revenue annually, even if it's growing at its current rate of around 50 per cent, is an awfully big sticker price for any industry.” - Victor Basta, managing director, Magister Advisors

Commenting on Funding Circle’s latest valuation in an FT column, Victor Basta, managing director at Magister Advisors, said: “£2bn for a business generating only something around £100m of revenue annually, even if it's growing at its current rate of around 50 per cent, is an awfully big sticker price for any industry. That amounts to over 16x revenue – for perspective, Google and PayPal are both valued at only 7x revenue.”

US online lending companies that offer a similar service to Funding Circle haven’t fared well since their IPOs. Both LendingClub (LC) and OnDeck (ONDK) went public in 2014 at $5.4bn and $1.3bn respectively, the valuations of both have since plummeted by over 70%.

Part of the US problem has been lack of regulation however; LendingClub has been marred by a series of scandals and investigations since its IPO that have driven down its price. Funding Circle on the other hand has long been regulated by the Financial Conduct Authority, removing any risk of such outcome for the British firm.

And given the strong year on year growth in facilitated loans, along with strong government support, things should look positive for Funding Circle post float. The company also recently expanded its ISA offering (first launched in 2017, it’s had £90m plugged into it so far), enabling anyone to convert their traditional ISA to a Funding Circle ISA.

“This listing is a catalyst for the industry to be taken more seriously,” - Christian Faes, co-founder, LendInvest

Funding Circle has appointed Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Numis Securities to broker the deal.

Observers say the float could trigger more fintech IPOs in London this year. “This listing is a catalyst for the industry to be taken more seriously,” Christian Faes, the co-founder of property investment platform LendInvest told Bloomberg in March. “Businesses like ours aspire to be publicly listed, and I think this does pave the way for other offerings.”

Those eyeing up a potential London IPO in 2018 or 2019 include money sending platform Transferwise and digital challenger bank Revolut, currently valued at $1.6bn and $1.7bn respectively.