The Fintech company listed on the London Stock Exchange Supply@Me Capital, active in the field of so-called inventory monetization, i.e. the enhancement of the stock of industrial companies, is working on its first securitization.
The operation had been anticipated to BeBeez by the founder of Supply@Me, Alessandro Zamboni, who said: “The company has originated contracts with client companies for inventory monetization for a total of over $1 billion (€900 million) and these are three-year contracts, which offer investors securitization notes a more competitive range of returns compared to existing financial products on the market within working capital.”
Zamboni then added: “In the meantime, we are signing agreements with institutional investors” and “shortly, during April, we will bring to market our first issue worth over $294 million (€250 million), which will be placed on the market by a major British operator with whom we have an agreement for a total of $1.17 billion (€1 billion) of issues distributed in four transactions and we will grow with a target of $4.1 billion (€3.5 billion) in 2023.″
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The securitization program will cover the entire portfolio of Supply@Me
The British operator in question is StormHarbour Securities LLP, to which the company entrusted, last April, the placement of the abs and which is currently dealing with 16 institutional investors interested in joining the first tranche of the securitization, which concerns the stock of 40 companies reported to Supply@Me by its business partners (fintech, banks, professional firms, etc.), in what is defined by the company as an open funding approach.
To date, the total number of client companies already originated and waiting for the inventory monetization service is 97 (compared to 66 at December 31st, 2019) and the securitization program will cover the entire Supply@Me portfolio within 12 months, which at the end of 2019 had contracts worth $1.13 billion (€970 million).
The Supply@Me platform uses the Sia blockchain
Through the Supply@Me platform, companies can create value from their inventories, optimizing their working capital and improving the efficiency of the supply chain. Inventories are demobilized through the use of smart contracts and the blockchain of Sia, the group specializing in payment infrastructure controlled by Cdp Equity.
Thanks to SiaChain, the platform is able to analyze and monitor prices and quantities of the various stocks. Supply@Me purchases and securitizes the inventories of client companies and places the notes of the securitization with institutional investors. The possession of the inventories remains in the hands of the client company, which, when it sells the goods, reimburses the securitization vehicle with additional inventories from the warehouse.
This round lasts for 3 years and only the last transaction will be refunded in cash, while any unsold will be repurchased by a reseller with whom Supply@Me has already entered into a prior agreement for the purchase at a fixed price. The average target company typically has a turnover of approximately $117.5 million (€100 million). The current average size for each inventory monetization transaction is approximately $17.6 million (€15 million).
At the same time, Supply@Me is working with two main Italian banking operators to develop securitizations of inventory of corporate clients of banks, where the originator banks themselves will also be investors in the notes (self-funding approach). Those banks in turn have submitted 272 other potential new corporate clients to the platform. The actual acquisition of these new clients could already exceed, in the coming months, the target of 310 companies planned at the end of the plan (2024).
Supply@Me is also working with a UK financial operator to organise a first pilot inventory monetisation programme in the UK (up to 10 UK corporate customers) by the end of 2020. In parallel, fintech is therefore dialoguing with several potential UK business partners in order to take care of the origination of the first UK customer companies as part of the pilot programme. As per the company’s business plan, further feasibility studies have been launched to assess the launch of the inventory monetisation service in other geographical areas. In this context, Supply@Me is also analysing opportunities in non-EU countries.
The company was listed on the LSE last March, with a capitalisation of no less than $296.3 million (£227.5 million) and a free float of 26%, following the reverse merger between the Italian scaleup fintech Supply@Me srl and Abal Group, a so-called cash-shell company, which until the beginning of February 2020 was listed on Aim in London and was renamed Supply@Me Capital.
The Fintech company is now 72.95% controlled by TheAvantGarde Group spa, which in turn is owned by Alessandro Zamboni and other investors. Also members are a group of investors who in June 2019 had subscribed a $2.35 million (€2 million) capital increase in club deals, based on a 100% valuation of $29.4 million (€25 million); Equita sim and Ceresio sim investors on behalf of their private clients, who invested in club deals, and the Maltese asset manager Parrot Capital (Global Capital Plc).
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First published in Be Beez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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