Trade finance shop [email protected] Capital will acquire TradeFlow Capital Management, a Singaporean player in the space that primarily serves small- to medium-sized businesses (SMBs), according to a press release.
The deal will let London-based [email protected] “further enhance its platform, delivering a global inventory monetization service, including the monetization of both inventory ‘in-transit’ (in particular, commodities), and warehoused goods,” the release stated.
The deal is expected to take place in two parts, according to the release. The first part will include the payment in June of 4 million pounds (about $5.7 million) in cash and 813 million newly issued [email protected] shares.
The second part of the payment, according to the release, will be “earn-out payments covering the period from January 2021 to December 2023, made in cash or shares” depending on [email protected]’s preference.
TradeFlow has been valued at 31 million pounds (about $44 million), the release stated.
[email protected] will fund the first part of the deal with an infusion of cash from new institutional investors. It will expand its board of directors to add “additional banking and legal experience,” according to the release. Once nominating processes are complete, two of those new directors will be Tradeflow Co-Founders and Directors Tom James and John Collis.
The men “will be key members of the combined business,” the release stated.
[email protected] CEO Alessandro Zamboni said in the release: “We have been continually impressed by the quality of the business that Tom and John have built, having established themselves as a respected funder for inventory in transit, particularly among [SMB]-sized businesses. By bringing TradeFlow into the [email protected] stable, we will have an offering for the supply chain sector which surpasses anything available globally, with vast opportunities to create even more value for our investors.”
Collis said in the release: “Signing the SPA with [email protected] brings us to the next phase of TradeFlow’s growth. The economic and physical challenges throughout the pandemic have left many businesses with — even if it is a cliché to say so — an unprecedented set of supply chain issues for goods on the move. We look forward to joining forces with Alessandro and his team in due course and improving the working capital position of even more businesses with the backing of [email protected].”
James said in the release: “Our non-credit approach to enabling physical commodity import/export transactions is unique in the trade finance hedge fund world, as is [email protected]’s approach to inventory monetization for manufacturing and trading businesses. The combination of the expertise in TradeFlow Capital and [email protected] will broaden our shared geographic footprint and create a global digitized offering which will create a number of benefits from both a funding, technology and customer origination perspective.”
The deal comes after the trade finance sector was jolted by the collapse of Greensill Capital earlier this year.
James told PYMNTS in April: “The finance industry will learn from this. Better systems of trade enabled by technology that allows transparency, verifiability, authenticity checks and traceability are the way forward.”