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 🙂
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