Orchard Funding falls below IPO price after regulatory delays, hiring hitch

12th Jul 2016 12:12

(ShareCast News) - Insurance premium financing specialist Orchard Funding warned that it had found it difficult to grow lending due to "significant" regulatory delays stemming the flow of new insurance broker customers into the market and the slow process of recruiting suitable senior salespeople.Shares in Orchard, which floated in July last year to raise funds to grow its business of insurance premium finance and professions funding, fell 22% to 85p, below their 96p flotation price as the company warned that it expected revenues for the year to 31 July would be broadly level with the prior financial year, when it generated £3.41m.It also said its pipeline of new business opportunities was "significantly larger" than directors had anticipated on flotation in July last year.Management have found the process of hiring senior sales individuals had taken longer than originally envisaged but had now been resolved."Furthermore, Orchard said the new Financial Conduct Authority's consumer credit regime "has significantly delayed approval of new lender applications", which as a result, is extending the amount of time it takes insurance brokers to set up in-house finance companies even before they could then be expected to borrow from Orchard.Chief executive Ravi Takhar added: "Orchard continues to prudently lend into safe and secure lending markets and has been able to conservatively increase its lending over the past 12 months."We are disappointed not to have been able to make the step change up in revenues we were expecting in this financial year but we believe we are well placed to do so over the next 12 months."