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"We are a true alternative investor."
Founder & CIO
Our strategy is transaction-based lending to Small and Medium-Sized Enterprises (SMEs). Credit is assessed and secured against the counterparty and/or the underlying product being financed. This differs from traditional bank business of balance sheet assessment and unsecured lending.
Trade finance has historically been a profitable function of banks, but regulatory changes and balance sheet restructuring following the financial crisis of 2008 has meant that many banks have been forced to scale back this lending business. This has made trade finance significantly harder for smaller producers and traders to access. This has led to increased demand for alternative source of finance while the risk profile at a transaction level remains unchanged. This is a new opportunity for investors.
The most fundamental issue in international trade finance is the method of payment agreed between importer and exporter.
The exporter wants to accelerate payment from the importer, and the importer wants to delay and mitigate the supply risk from the exporter. Trade finance bridges the finance gap and settles the conflicting needs of the importer and exporter.
Commodity Trade Finance has grown faster than other syndicated financings due to:
- Development of free trade policies
- Growing investment and consumption needs in developing countries
- Increase in volumes traded
- Growing demand for secured assets due to change in risk appetite by banks, regulatory framework and constraints on liquidity
- A highly skilled and experienced management team
- A market-leading alternative lending source with highly attractive growth potential
- Access to commodity trade finance risk-return profiles and education of the asset class
- Global diversification
- Minimal commodity price exposure
- Low default risk, concentration risk and volatility
- Quarterly liquidity with no long-dated lock-ups or other liquidity constraints
- No heavily-weighted individual commodity or transaction risk
- Short-term maturities
- We maintain and develop an extensive database of trade finance counterparties covering multiple assets, regions and deal types.
- We identify transactions and counterparties that offer the best risk-adjusted exposures.
- We pass selected transactions and counterparties through rigorous credit and commercial due diligence procedures.
- We select only those transactions that offer superior risk and return characteristics.
- We agree credit on a non-committed basis and lend on a transaction by transaction basis.
- We manage the treasury, structuring and risk functions for the lifetime of each transaction.
- Transactions are self-liquidating and funds – including profits and fees – are returned to the portfolio.