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A new investment
opportunity

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OBJECTIVE

Investment Objective

"We are a true alternative investor."

Kristofer Tremaine
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.

TRADE FINANCE

Commodity
Trade
Finance

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

WHY KIMURA

Advantages
for Investors

  • 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
  • True liquidity profile where exposures are matched to redemption terms with no long-dated lock-ups
  • No heavily-weighted individual commodity or transaction risk
  • Short-term maturities

APPROACH

Investment Process

We employ an active investment approach by selecting high quality trade finance transactions across strategic asset classes.

We finance the full range of senior and junior debt structures as well as configurations of structured debt. We consider transactions globally, with an initial focus on Europe, CIS, Africa and Asia.

We adopt a stringent client on-boarding process. Due diligence is at the centre of the company’s operational mandate. A thorough review process is conducted on each new counterparty and on every transaction.

We deploy funding across the supply chain spectrum from producer, processor/refiner to distributor/merchant trader. Loans are mostly secured against the underlying commodity with additional recourse to the borrower’s balance sheet.

TRADE FINANCE

Risk
Management

Defaults within trade finance are already very low: according to the International Chamber of Commerce’s 2016 Global Trade and Finance Survey, the default rate for short-term trade finance is 0.02%.

Our investment committee mitigates this further by only investing in commodities, regions, counterparties and transactions that satisfy very strict risk and credit parameters.

Furthermore, since we take a portfolio approach across many separate and uncorrelated transactions, the risk to overall investor return from possible default in any individual transaction is diversified significantly.

Kimura will typically have recourse to various types of credit enhancement such as corporate guarantees, personal guarantees and insurance where Kimura is noted as either Loss Payee or an insured party on our borrowers’ insurance.

Most of Kimura’s financing is transactionally secured on the underlying commodity and self-liquidating (ie we get repaid upon delivery of the underlying commodity that we are financing).

PORTFOLIO

Portfolio
Construction

  • 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.