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GTR Fintech Platforms Report Q3 2018

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54 | Global Trade Review www.gtreview.com Fintech platforms report GTR FINTECH FOCUS Finbarr Bermingham speaks to some of the world's primary invoice financing platforms to provide a guide to those operating in the space. I n the universe of platforms proliferating the trade space, those offering invoice and receivables financing are among the most common. In conversations with readers, there is often some confusion as to what the differences between these platforms are. GTR takes a look at 15 platform operators in different parts of the world to pick out some of the similarities and differences. Size Unsurprisingly, the platforms vary in size, both in the volumes and the values of invoices they process. Even within individual platforms, the range can be huge. Taulia, for instance, is one of the largest companies GTR interviewed. It processed more than US$1bn in receivables purchases on its platform in a day in December 2017. "The largest was US$11mn for an aero parts supplier, while the smallest was US$11 for a locksmith: there's a huge range," says Matthew Stammers, Taulia's vice- president of marketing. Often, the companies strike an agreement with a large multinational buyer, through which its suppliers can use their platforms to have their invoices discounted or paid. Given the complexity of supply chains, the range can be vast. In some cases, these invoices are securitised and sold as notes to investors. This is the model used by Orbian, which bundles invoices issued by the likes of Siemens and General Mills and sells them in notes to banks. While the notes may be worth more than US$100,000, the range of invoices they contain can be anything from US$1,000 to US$10mn. Investor base Every company spoken to for this story is either using predominantly institutional capital, or is moving in that direction. In the case of IncomLend, a Singaporean company, the larger the platform grows, the more need it has for larger investors. "We started with some retail money, mostly focused on high net worth individuals. But our volumes are growing so fast, our platform is gearing up for institutional investors, which are being registered on the platform as we speak. Going forward, we will be focusing on institutional because the volume can't be supported by a bunch of individuals," IncomLend founder Dimitri Kouchnirenko tells GTR. It seems that in Asia, where the market is more nascent, platforms are more inclined to use retail investors. However, in the case of Acudeen and CapitalMatch, the majority of the funding comes from the minority institutional investors. "Out of 700 funders, 650 are retail. But the 50 institutional investors buy the majority of invoices, providing about 80% of the total funding," says Acudeen founder Magellan Fetalino. The model of choice Many of the companies use a blended model of auction-based invoice funding and fixed price. In an auction, the seller places the invoice on the platform and takes bids from funders. This model is used to different extents on both ends of the scale, from the large multinational platforms (LiquidX) to domestic platforms (Acudeen), both of which use both bidding and fixed pricing. Stammers at Taulia claims the auction-based model creates uncertainty. "You should be able to manage your cash position for you and your suppliers. The way to do that isn't an auction model, where suppliers have to bid for cash and don't know whether they get it or not," he says. "The largest invoice was US$11mn for an aero parts supplier, while the smallest was US$11 for a locksmith." Matthew Stammers, Taulia

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