TIDMSYME
RNS Number : 3289N
Supply @ME Capital PLC
20 January 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU, WHICH IS PART OF UNITED
KINGDOM DOMESTIC LAW PURSUANT TO THE MARKET ABUSE (AMMENT) (EU
EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR)
IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
20 January 2023
Supply@ME Capital plc
(the " Company " or " SYME ", and together with its
subsidiaries, the "Group")
Year-end business update
SYME, the fintech business which provides an innovative fintech
platform (the "Platform") for use by manufacturing and trading
companies to access Inventory Monetisation(c) ("IM") solutions
enabling their businesses to generate cashflow, is pleased to
provide an update on its recent business activities.
Key highlights:
-- Growth in the pipeline of client companies with warehoused
goods inventories suitable for monetisation [1] was valued at
GBP343.5m as at 31 December 2022. This compares to GBP329.8m as at
23 September 2022.
-- Progress has been made towards securing traditional funding
routes in both European (including Italy) and UK markets.
-- New Italian legislation - pegno non possessorio (the "PNP
Regulation") - which SYME anticipates will be promulgated shortly,
is expected to provide greater opportunities for Italian banks to
adopt the Platform for use under white-label agreements and further
enhance the security available to the Inventory Funders in
traditional IM transactions.
-- TradeFlow Capital Management Pte. Limited ("TradeFlow")
experienced growth in assets under management ("AUM") in the year
ended 31 December 2022 of approximately 35%, relative to the year
ended 31 December 2021, representing a continued and growing
endorsement of its Investment Advisory strategy.
Warehoused goods monetisation
Overview
Origination of client companies in SYME's core regions of Europe
(including Italy) and the UK have continued to grow, with the
warehoused goods monetisation pipeline standing at GBP343.5m as at
31 December 2022. This compares to GBP329.8m as at 23 September
2022.
SYME's focus remains on maintaining, growing and converting the
pipeline, whilst attracting new Inventory Funders, starting from
smaller ticket IM transactions, to build a track-record, and then
moving to larger ticket IM transactions. With the inaugural IM
completed and others in process of being arranged, the foundations
of positive track-record are being laid by SYME with the
expectation that it would become progressively easier to attract
new Inventory Funders to IM transactions. The appetite of Inventory
Funders has also driven the SYME origination team to assess
potential IM amounts over GBP/EUR/USD 10m and, subject to the
appropriate structure and funding being in place, there are a
number of larger ticket opportunities that could be converted
during 2023.
The market need for inventory solutions with a proven technology
platform and infrastructure from day one is continuing to drive
significant opportunities for SYME's client company origination and
for self-funding opportunities with global and local banks, the
latter of which are not included in the above referenced pipeline
figures.
The onboarding of new client companies to the Platform will
generate additional due diligence fees and, once the client
companies have signed IM binding agreements, origination fees.
SYME has continued to work diligently to build quality
portfolios of client companies to attract additional Inventory
Funders. Leveraging the first IM transaction made in 2022, SYME, as
the provider of the Platform and inventory servicer, is now working
on the following funding routes:
-- Inventory Funders via the Global Inventory Fund ("GIF")
In addition to the existing Cayman-based structure serviced by
APEX Group[2], advised by TradeFlow, SYME is evaluating the option
of sponsoring the creation of a European structure together with a
market-leading fund service provider and to build, progressively, a
multi-asset management model where the Group can also cooperate
with further European and UK authorised asset managers.
-- Special situations / deals
SYME also recognises the importance of allowing initial
traditional Inventory Funders to build up a bespoke funding
structure on top of the stock companies (trading companies which
deliver the IM transactions by using the Platform). This route can
be built through dedicated securitisation issuances or similar
direct investing structures, which are still being considered.
-- Direct partnerships with banks
Global and local banks have expressed an interest in using the
Platform to directly serve their clients. SYME has developed two
alternative approaches for such banks, including the "self-funding"
model (where a bank will be able to use the Platform, including the
legal and accounting framework provided by SYME, to fund companies
that are already clients of such bank) or the "white-label" model
(where a bank will only use the technology components of the
Platform to fund directly such bank's existing clients).
-- Token route
As per the RNS of 21 December 2022, the Company aims to involve
multiple liquidity providers to deploy new IM transactions
(including crypto asset managers and direct investors through
liquidity pools partnerships) in line with the goals of Phase Two
of the Strategic Agreement with VeChain Foundation[3] ("VeChain").
In this regard, SYME is compiling, from its global pipeline, a
portfolio of potential client companies with up to approximately
US$50m of inventory to be monetised across such portfolio. This
reflects the residual commitment of US$8.5m budgeted by VeChain
and, the objective to raise additional capital from the VeChain
community and other crypto/digital assets investors.
SYME also expects to commence a new onboarding process with
Centrifuge[4], and, accordingly, the opportunity to explore
potential funding of IM transactions through DeFi (decentralised
finance). The Company will provide a further update to the market
as and when the Centrifuge onboarding is finalised.
Europe (including Italy)
The Group's origination team works with a select panel of
originators and local business introducers who continue to make
introductions to high quality businesses. As the awareness of IM
grows, following the first IM transaction, SYME is also seeing
'larger ticket' opportunities.
The Group has built a strong pipeline in Italy and other
European jurisdictions to facilitate further IMs with VeChain in
"Phase Two" and other traditional Inventory Funders. SYME is also
seeing more opportunities for self-funding with local banks across
Europe and their client companies.
For example, SYME is currently working with:
-- an Italian bank and a Big 4 accountancy firm to secure an IM
transaction with an IM value of up to EUR10m, which involves an
existing client of the relevant Italian bank; and
-- a consortium of European investors for a securitisation
issuance to fund an IM transaction with an IM value of up to EUR5m,
which will involve at least one Italian and one UK client
company.
Furthermore, the Company believes the new PNP Regulation, which
is expected to be published shortly in the Official Journal of the
Italian Republic, will provide opportunities to commence its
white-label business model. The PNP Regulation will, for the first
time in Italy, introduce the concept of "security interest" (a
concept widely adopted across Europe and the UK) into Italian law,
and allow entrepreneurs to access the financing of their inventory
more easily, without having to sell, transform or otherwise dispose
of their business assets.
Moreover, the "non-possessory pledge" introduced by the
Decree-law n. 59/2016, later converted into law, and regulated more
specifically by Decree no. 114/2021 of the Italian Ministry of
Economy and Finance, will soon be accessible to Italian businesses
following the latest provision taken by the Italian Revenue Agency
(Agenzia delle Entrate) with which the digital register for the
registration and keeping of pledges becomes operational. As a
result of that register, all the operations relating to such
pledges will be capable of being carried out swiftly and
electronically (including, but not limited to, registration,
consultation by anyone, modification, renewal and
cancellation).
For banks and investors, the PNP Regulation will facilitate the
effective exercise of the rights of secured creditors, aligning the
effectiveness of the enforceability of the movable pledge with the
best practices already adopted in other countries.
Market operators consider the PNP Regulation to be a significant
development for the Italian industrial and manufacturing sector. It
is expected to help companies to attract investments aimed at
divesting and/or financing their own inventory.
For SYME, it is expected that the PNP Regulation will create
further opportunity for traditional Inventory Funders to invest in
IM transactions in light of the proposed improvements to the legal
enforceability of guarantees over the inventory, through the
arrangement of self-funding and/or white-label agreements, which
leverage the Platform.
The Company will provide further updates to the market as and
when the PNP Regulation is promulgated.
Finally, with reference to other projects previously announced
by the Company:
-- SACE: the Company has worked closely with SACE[5] to study a
bespoke guarantee covering the hypothetical risk that the Italian
Stock Company would be unable to repay the loans (or notes)
provided by the Inventory Funders. The most recent feedback that
SYME has received from SACE is that in order to continue with the
bespoke guarantee, there is a need for an update to the local legal
framework regarding state aid, which is already part of the Italian
government's legislative agenda. Such an amendment would allow SACE
to guarantee domestic transactions - such as the IM transactions -
which are currently not part of the SACE's core products, which are
focused on export or international business.
-- Captive & Fintech bank initiatives: over the last two
years, due to the turbulent economic outlook (post-COVID-19 and
impacted by the energy crisis) the Company had delayed the decision
to invest directly into an authorised and licensed banking
business. This decision was validated by the evolution of banking
regulation which contains further limits and constraints to the
lending activity of banks. As such, with reference to the following
potential initiatives:
o Captive bank: the Company has been advised by its key
shareholder the AvantGarde Group S.p.A. ("TAG"), that the
initiative is still active. Specifically, TAG, together with its
partners, is evaluating an investment into a wider European license
which would not focus solely on the Italian jurisdiction. This
initiative is still in progress and SYME will provide further
updates via RNS as and when it is appropriate for it to do so;
and
o Fintech bank: as per the RNS on 29 June 2021 where the Company
updated its captive funding strategy to include the possibility of
a direct investment into a fintech bank owned by an Italian banking
group, the commercial sensitivities and legal complexities meant
that the Company was not always able to update investors regarding
such initiatives. The term sheet between the parties has expired,
and, in light of the economic environment described above, the
Company is continuing to assess the benefits for its business and
shareholders and remains in discussion with the Italian banking
group regarding a new potential agreement, whilst continuing to
evaluate similar opportunities which the market can offer.
United Kingdom
Origination in the UK has continued to grow, with client
companies sourced through SYME's strong relationships held with a
wide eco-system of introducers which have also enabled the growth
in the European portfolio of client companies. There are several
large ticket opportunities to monetise subject to the appropriate
structure and funding being in place and as the Company continues
to build its track-record, this will unlock further client company
opportunities.
Additionally, as stated above, SYME is working with a consortium
of European investors for a securitisation issuance to fund an IM
transaction with an inventory monetisation value of up to EUR5m,
which involves a first UK client company and at least one Italian
client company.
For both UK and Italian markets, the Company is continuing to
work with StormHarbour Securities LP to originate potential
Inventory Funders.
Middle East and North Africa (MENA)
Business opportunities in the UK and Europe continue to be
SYME's core focus, but progress is also being made for future IM
transactions in the MENA region, particularly in the United Arab
Emirates, supported by a select panel of local partners and
brokers.
More specifically, leveraging the partnership agreement signed
in 2022 by TradeFlow and Cargoes Finance (by DP World), SYME
started to work directly with DP World to structure an IM
transaction.
As previously announced, the Company remains in discussions with
a bank operating in Saudi Arabia regarding the white-label tender,
though that has been delayed for operational reasons due to the
bank's business priorities.
Finally, with the objective of prioritising the traditional
funding routes and optimising its capability plan, the Company
temporarily placed the Shariah project on hold, waiting for the
optimal time-to-market.
United States
In 2023, the Company intends to conclude the project started
with a Big 4 consultancy firm aimed at conducting a dedicated
assessment regarding the application of the IM framework under the
US GAAP.
In parallel, leveraging the partnership with Anthony Brown,
consulting company Epicirean Brands and The Trade Advisory, SYME
continues to engage with specific potential Inventory Funders and
white-label partners on how best to structure the first IM
transaction in US.
As previously stated, while SYME sees a number of opportunities
in the US, the Company's current priority is to concentrate, for
now, on its core markets.
In-transit monetisation
TradeFlow has continued to focus on the following key areas of
activity during the year ended 31 December 2022:
-- fund management;
-- digital fund support implementation and strategic
developments in technology/fund management; and
-- alliances with logistic partners who share our digitalisation vision.
In respect of the fund management business, TradeFlow's
relationship with the International Chamber of Commerce ("ICC")
continues to progress and it anticipates launching an ICC endorsed
fund to support small-medium-sized enterprise trade in 2023. The
existing TradeFlow funds covering in-transit cargo transactions are
on track to make targeted returns for its investors.
TradeFlow's partnership with the Singapore Institute of
Technology continues to progress with its Research project contract
to develop an artificial intelligence system for enhanced
predictive analytics around logistics and shipping, which is on
track to yield results in 2023.
Alessandro Zamboni, CEO of SYME, said:
"Today's update evidences the continued and significant progress
being made by the Group. The next key milestones on SYME's horizon
are traditional funding-backed IMs in Italy and the UK. These
transactions will serve a dual-purpose: to build our track-record
for Inventory Funders; and to support corporates in sectors where
we see growth opportunities and the potential to scale to larger
inventories."
"We further expect the PNP Regulation in Italy to open
additional routes to market for our white-label offering, which
will further validate our ready-to-go Platform and strengthen
SYME's position as a partner of choice for global and local banks
interested in funding inventory-backed transactions."
"It's great to see an increased appetite by the investors on
real asset class related to inventories. TradeFlow's relationship
with ICC is a concrete example. It reflects the size of the target
addressable market which continues to show a huge funding gap
suffered by mid-caps and SMEs, which we are targeting with unique
IM market proposition."
For the purposes of UK MAR, the person responsible for arranging
release of this announcement on behalf of SYME is Alessandro
Zamboni, CEO.
Contact information
Alessandro Zamboni, CEO, Supply@ME Capital plc, investors@supplymecapital.com
MHP Group, SupplyME@mhpgroup.com
Notes
SYME and its operating subsidiaries provide its Platform for use
by manufacturing and trading companies to access inventory trade
solutions enabling their businesses to generate cashflow, via a
non-credit approach and without incurring debt. This is achieved by
their existing eligible inventory being added to the Platform and
then monetised via purchase by third party Inventory Funders. The
inventory to be monetised can include warehoused goods waiting to
be sold to end-customers or goods that are part of a typical
import/export transaction. SYME announced in August 2021 the launch
of a global Inventory Monetisation programme which will be focused
on both inventory in transit monetisation and warehoused goods
monetisation. This programme will be focused on creditworthy
companies and not those in distress or otherwise seeking to
monetise illiquid inventories.
[1] The warehoused goods monetisation pipeline key performance
indicator ("KPI") represents the current (British Pound Sterling
("GBP") equivalent) potential value of warehoused goods, rather
than pipeline revenue expected to be earned by the Group. As such,
this provides a good indicator of the level of customer interest
and demand for the Group's current and future warehoused goods
monetisation services. The warehoused goods monetisation pipeline
KPI is an unaudited figure.
[2] https://www.apexgroup.com/
[3] https://www.vechain.org/
[4] https://centrifuge.io/
[5] https://www.sace.it/en
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UPDNKCBDFBKDODD
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