LFP180 – Ever-More Sophisticated Fintech Propositions – Inventory Monetisation w/Alessandro Zamboni CEO Supply@Me

Fintech is increasingly getting well beyond providing the simplest of transactions and deep into the complex end of FS. Supply@Me Capital are listed on the UK Stock Exchange and recently acquired Singaporean firm Tradeflow Capital.  They provide inventory financing by securitising manufacturers’ and trading firms’ inventory in a very interesting fashion leading to a new investable asset class and better funding for the businesses.

The LFP has covered various forms of Trade Finance in the past from financing suppliers to financing purchasers – in effect financing goods in transit – and all sorts of invoice discounting. However we have never before had a Fintech who promises to finance unsold goods in the warehouse.

In this episode CEO Alessandro Zamboni guides us through the evolving structures that Supply@Me provides via it’s platform – the motivation of which is once again to expand the range of capital providers to business by making previously uninvestable asset classes investable thereby providing a good deal for both parties and a turn for the platform in the middle.

Topics discussed include:

  • Alessandro’s journey from musician through consultancy to CEO and inventory financing
  • the relevance of the background in regulation of banks to know what the parameters were of the current market
  • founded in 2017, listed in UK last year
  • historically working capital was funded by banks who, however, made loans to the company – with plenty of context, terms and conditions
  • asset-based finance was generally applied to matters such as machinery
  • Supply’Me’s innovation is to create a marketplace for inventory purchased and wrapped-up inside a special purposes vehicle with a repurchase agreement when the manufacturer/trader had a commercial agreement to sell the inventory himself
  • the move from cash-based working capital financing to asset-based working capital financing
  • not a debt but a commercial facility to monetise the inventory whilst keeping the stock in your warehouse – so not a financing but a monetisation
  • a capital markets approach to monetisation
  • where does the commercial risk lie?
  • the platform has no market risk but bridges the inventory side with the buyers of financial assets
  • the platform digitalises the inventory via legal structures
  • details of how the structuring works
  • creating a diversified portfolio in the SPV to sell a range of asset types in one vehicle thereby spreading the risk
  • moving towards more ~”mutual fund” structures which over time will be more globally marketable
  • this is the motivation for purchasing Tradeflow Capital this year
  • Supply@Me are in 16 sectors right now from livestock through wine to toys and many more
  • their model is more flexible than asset-based/capital markets general desire for liquid assets
  • a Case Study of toys
  • diving into how the mechanics would work in the case of an inventory of wine
  • importance of the legals/accounting as well as the simple tech angle
  • the platform buys at book value + a margin – not a discount
  • the former owner now acts as an agent to sell the wine and buys back at the same price with a profit share on the final sale price to the end-buyer
  • what happens in the case of failure of the agent to sell the inventory
  • monitoring – KPIs/checks etc to ensure that the assets aren’t subject to mismanagement, fraud etc
  • the role of servicers
  • the increasing demand for higher yielding more illiquid assets
  • Supply@me’s future plans and partners they are looking for to expand the business further
  • monetising in-transit inventory as well as in-warehouse

And much more 🙂

Share and enjoy!