Ruaridh Guy has joined Squire Patton Boggs as a partner alongside two associates, Tina Wong and Lauras Rambinas.

The firm says the trio has expertise in shipping disputes including those relating to bills of lading, charterparties and collisions, and regularly work on commodities disputes and issues related to letters of credit and guarantees.

Guy has acted in arbitration and court proceedings in Hong Kong, Seoul and Singapore and has also represented creditors and liquidators in insolvency matters.

Squire Patton Boggs’ Hong Kong office managing partner James Tsang says Guy “brings specialist litigation expertise to the firm and his wide-ranging client base will also create opportunities for our other practices in Hong Kong and across the Asia Pacific region”.

Guy arrives after a 13-year stint at Ince, while Wong and Rambinas joined the firm in 2021 and 2022 respectively.

Ince has lost almost 20 lawyers from it shipping team over the past month, according to reports in the legal press, with two eight-strong teams departing for rival firms Hill Dickinson and Stephenson Harwood.

The firm says it operates independently from the UK’s 156-year-old Ince Group, which bought by law firm Axiom earlier this year. Last month the renamed Axiom Ince was shut down by the Solicitors Regulation Authority amid allegations client money was used to fund the acquisition.

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The deal builds on an oversubscribed US$1.45bn facility agreed by the oil trading giant in October last year. This year’s facility consists of a US$1.28bn one-year tranche, a US$320mn two-year tranche and a US$500mn accordion feature. 

The funds will support working capital financing for trading activities as well as general corporate purposes, Gunvor USA says. 

As with last year’s facility, Rabobank and Société Générale are joint lead arrangers and active bookrunners, with the Dutch lender serving as administrative agent, co-ordinator and left lead. 

ING Capital again participates as joint lead arranger as well as passive bookrunner. Fellow joint lead arrangers Natixis, MUFG and Crédit Agricole CIB – not named as a participant last year – also take on co-syndication duties. 

SMBC, Citibank and Industrial and Commercial Bank of China act as co-documentation agents. The other nine lenders are not named by Gunvor. 

Gunvor USA managing director David Garza hails the deal as a demonstration of the company’s resilience “during times of market stress”. 

Thomas Smith, regional chief financial officer for the Americas, adds: “Despite a challenging credit market, the facility benefitted from the strong support of our 18 new and existing lenders, being oversubscribed in syndication and subsequently increased to US$1.6bn.” 

Smith adds Gunvor’s banking partners “remain supportive of the company’s strategy for continued participation in traditional energy markets while pursuing its energy transition goals”. 

The facility is the latest of several syndicated deals secured by the trader in recent months. In July, Geneva-headquartered Gunvor significantly expanded the size of its revolving credit facility for the issuance of off-balance sheet instruments, attracting 30 participants to a transaction totalling US$1.37bn. 

The same month, its Singapore entity closed a US$1.12bn revolving credit facility backed by 26 lenders, just two months after securing a US$600mn borrowing base facility in support of its oil business in the region. 

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El Maayergi makes the switch from Arab African International Bank, where he served as group chief operating and transformation officer since 2020.

At Afreximbank, he replaces Amr Kamel, who worked at the bank for nearly three decades before retiring in November 2022.

Based in Cairo, El Maayergi is tasked with sourcing new transaction opportunities for Afreximbank and developing products for trade finance and syndications, as well as advisory and capital market services.

He will act as a liaison between Afreximbank’s president, Benedict Oramah, and the lender’s board of directors, stakeholders and investors, and is further tasked with mitigating risks in the global trade bank’s value chains.

In a career spanning over three decades, El Maayergi has also held senior transaction banking, corporate banking and trade finance roles at financial institutions in the Middle East and North Africa, including Abu Dhabi Islamic Bank, Standard Chartered, Citi and Société Générale.

“El Maayergi boasts a long and proven track record of structuring innovative trade finance and bilateral lending solutions, including Islamic structures, for both multinational corporations and large local corporates,” Afreximbank says.

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Recognising this client need, J.P. Morgan has introduced a pre-shipment finance programme in the US, which leverages its established supply chain finance (SCF) rails to provide early-stage capital, especially to minority and diverse-owned suppliers – driving end-to-end resilience that encompasses every facet of the supply chain.

In this Industry Perspective, Dominic Giordani, executive director, North America supply chain finance product management at J.P. Morgan, explains how this initiative not only addresses liquidity challenges but also supports supplier relationships that are more collaborative from the start, ensuring businesses can navigate uncertainties while fostering an inclusive economic landscape.

Q: How does J.P. Morgan’s pre-shipment finance programme enhance supply chain resilience?

Giordani: If large corporates have learned anything from the last few years, it’s that diversity within supply chains is key to building resilience and adaptability.

We’re seeing more appetite from our clients to engage with a wider selection of suppliers, often as part of specific supply chain diversity, equity and inclusion (DEI) initiatives. However, this is often easier said than done, since small businesses may not be well-capitalised or well-resourced enough to ramp up production in order to fill a larger purchase order when it comes.

By providing impact capital to this segment of underrepresented businesses, we are injecting liquidity into the part of the supplier base that needs it the most, as well as ensuring more stability for our clients’ supply chains.

Q: Small companies often find it difficult to obtain pre-shipment financing because traditional solutions tend to be geared towards post-shipment, post-acceptance solutions. How are you closing this gap?

Giordani: This is a new way of thinking around providing working capital to this underserved small business segment, which often has fewer channels to access bank lending.

Given the current rising rate environment, it is increasingly difficult for small businesses to access the working capital finance they need. While initiatives such as US Small Business Administration loans go some way to help, borrowers need to meet strict eligibility criteria and the process is often quite slow. With this programme, we are making it very easy and streamlined for a small business to get a working capital loan at the very beginning of the process, so long as they have a good commercial relationship with their buyer – and we’re also securing a competitive rate.

J.P. Morgan is putting funds into a securitised structure, and then we work with qualified community development financial institutions (CDFIs), who carry out the loan servicing on our behalf. We are currently collaborating with Community Reinvestment Fund, a large CDFI based out of Minnesota. They understand the market and are top-tier in underwriting loans for small businesses.

The upside of this product is that it does not require an underlying purchase order or invoice. Instead, it is linked to the holistic commercial relationship a supplier has with a buyer, which is a key differentiator in the market and means that suppliers can achieve increased financial stability earlier in the cash conversion cycle.

If a supplier gets a large purchase order, they can easily reach out to J.P. Morgan as part of the pre-shipment programme, and then get underwritten for a loan.

Q: As the cost of traditional lending rises, how important is it for the bank to contribute to greater awareness of trade and supply chain finance among SMEs and minority-owned businesses who might be new to the concept?

Giordani: Our initiative is recalibrating the trade finance landscape by enhancing financial literacy among smaller suppliers, particularly within the SME and minority-owned business segment.

Suppliers can use the funds from our pre-shipment finance programme for essential aspects like payroll and inventory, which further solidifies their role in the supply chain. As they become integrated into the SCF cycle, they benefit from lower rates and can use the generated cash flow to settle their initial loans. This creates an efficient, self-sustaining loop that recirculates capital within the supply chain, delivering stability and growth for these vital enterprises.

By introducing these businesses to end-to-end supply chain finance – and not just as a concept but as a tangible service with accessible capital – we’re expanding their financial toolkit. This empowerment enables them to scale up, meeting larger orders and contributing more robustly to their respective supply chains. For the buyers, it’s an opportunity to engage with a more diverse supplier base with minimal risk. And for J.P. Morgan, it’s about creating a holistic solution that drives financial inclusion, fortifies supply chains, and creates a win-win-win scenario in the marketplace.

Ultimately, our pre-shipment finance programme is a testament to our commitment to financial inclusion, offering an innovative and necessary support system that benefits all participants in the trade finance ecosystem.

Q: How does the pre-shipment finance programme fit into J.P. Morgan’s broader efforts to promote sustainability in supply chains?

Giordani: Our pre-shipment finance programme is a strategic enhancement to our ESG offering, where, in collaboration with third-party rating providers, we enable buyers to incentivise their suppliers with discounted finance rates based on ESG performance. This programme goes a step further by offering tailored loan programmes to qualified small businesses earlier on in the cash conversion cycle.

By committing our own capital and expertise to this programme, we’re investing directly in the success and sustainability of our clients’ supply chains. This isn’t just a product; it’s an end-to-end solution where everyone involved has a stake and stands to benefit.

The post Industry Perspectives: An inclusive approach to diversifying and strengthening supplier relationships appeared first on Global Trade Review (GTR).

Today’s banks must be nimble to meet the fast-changing needs of clients and seize the tech-driven opportunities of the digital world.

Over the last decade, technological innovations have enabled new access modes, such as online banking and mobile apps. This has helped consumers and businesses to migrate away from cash and cheques towards electronic payments. In addition, an increased demand for convenience and speed has resulted in a growing use of contactless and fast payments.

Pioneering a new kind of corporate banking

Digital has long been a key enabler of ADCB’s strategy, helping to drive service excellence and enhance efficiency. The bank’s strong financial position provides the foundation for substantial investment into the technology that is generating expansion across the business.

ADCB’s digital solutions ProCash and ProTrade have consistently exhibited strong growth in client adoption, a clear indication of their trust in the bank’s ability to deliver dependable and highly effective solutions for their cash management and trade finance needs.

The bank’s investment in these two flagship platforms demonstrates its ambitious commitment to digital transformation. The ProCash cash management platform offers highly reliable and secure online banking cash management solutions for corporates. It enables companies to initiate, reconcile and manage multiple payment types online, providing an exceptional level of customisation to meet specific client needs.

Launched at the end of 2018, ProTrade is a digital trade finance platform that provides trade finance clients with the freedom to transact online at any time, from anywhere in the world. ProTrade is designed to streamline and reduce trade cycles, automate supply chains, and lower operating costs, making international trade financing quick, easy, and secure.

Investing in innovation

ADCB continued its digital investments in 2022 and into 2023, rolling out a series of new features for ProCash to improve the user experience, with more enhancements coming soon. These included the addition of debit, credit and virtual card facilities that help clients to track their money in real time and provide a seamless proposition that continues to make banking more efficient.

In the trade finance space, ADCB introduced several innovative digital solutions, including a streamlined document handling process for exporters that has revolutionised the way trade export bills are managed, eliminating the need for the physical exchange of original documents. This accelerates the processing of export documents and leads to faster realisation of export proceeds.

ADCB has also introduced FinTrade, a Software as a Service cloud-based client platform designed to equip businesses with advanced tools for optimising their supply chain finance operations. Through this innovative solution, companies can efficiently manage their working capital and streamline their transactions in real time.

Furthermore, ADCB is investing in APIs and MT798 to make it easier for clients to engage digitally with the bank for their documentary trade solutions while using their preferred platforms.

Meanwhile, the introduction of Swift for corporates has simplified treasury and cash management processes. This automation-driven solution not only reduces the risk of errors but also provides global reach, enabling multinational corporations to manage their financial transactions and accounts with enhanced visibility and security.

Building on its growing reputation as a digital innovator, ADCB recently partnered with Dubai’s Department of Economy and Tourism and Norbloc to automate the annual updating of trade licence details for Corporate and Investment Banking clients. The digital process extracts trade licence details for existing clients via the blockchain platform, streamlining the verification process without requiring clients to provide renewed licences.

Digital corporate banking continues to evolve at astonishing speed. Banks that lack the know-how, resources or ambition to leverage the power of digital to transform their relationships with clients will quickly fall behind. But for those banks like ADCB with the experience and ambition to chart an innovative, digitally driven future, it represents a unique opportunity to seize the moment, building new, closer relationships with customers, reducing costs and enhancing revenue growth.

As part of its future transformation plans, ADCB is actively working on pioneering digital innovations that will further enhance client experience. By harnessing cutting-edge digital technology, ADCB aims to ensure that every interaction is seamless and client-centric, setting new standards for excellence in banking.

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In a further update to their guidance, two regulators have put financial institutions on notice to look for indications of export control violations in their customers’ activity in trade finance documentation.

US export control laws, largely overseen by the Bureau of Industry and Security (BIS), are designed to prevent US exports from contributing to the manufacture of weapons of mass destruction or the arms stockpiles and sensitive military technology of its rivals, such as China and Russia.

A joint alert published on November 6 by BIS and the Financial Crimes Enforcement Network (FinCEN), the US financial crime regulator, includes a list of red flags that may indicate attempts to export sensitive US goods and technology – or even foreign goods containing US inputs – to unauthorised end users.

“Financial institutions directly involved in providing trade financing for exporters also may have access to information relevant to identifying potentially suspicious activity,” the regulators say.

“This may include the financial institutions’ customers’ end-use certificates, export documents, contracts, or other documentation, such as those associated with letters of credit-based trade financing”.

The first red flag in the alert is “purchases under a letter of credit [LC] that are consigned to the issuing bank, not to the actual end-user” and “supporting documents, such as a commercial invoice, do not list the actual end-user”.

Neil Chantry, a specialist trade finance consultant, points out that some countries require imports to be consigned to a bank, so that red flag will not always be an indication of suspicious activity.

Banks would not typically be able to identify the end user of goods from an LC unless it is the applicant, he adds, meaning the negotiating bank would have to rely on due diligence on the customer and its counterparties.

Chantry expects banks will insist on exporting customers providing the necessary information to satisfy the requirements in the notice, but that “the problem is how effective is a bank’s ability to determine the ‘true end user’ when they have to rely on the information provided by their customer and the applicant of the LC”.

Other possible indicators of attempts to skirt export controls include companies that refuse to provide end-use and ownership information to banks; transactions where consignees appear to be mail centres or logistics companies; addresses of companies shared with military facilities; and goods being shipped by common transshipment routes.

Chantry, a former HSBC global trade and compliance executive, says most of the red flags should already be part of banks’ risk assessment models and due diligence reviews.

Since Russia’s invasion of Ukraine in February 2022, the US has put renewed attention on export controls as a way of stymying Moscow’s efforts to replenish its war machine.

BIS and FinCEN have previously issued alerts to banks, seeking their help to detect violations. Earlier this year the regulators said those efforts had yielded significant data on common transaction structures and transshipment methods being used by Russian importers.

“In the abstract, the guidance makes a lot of sense,” says Dj Wolff, a partner with law firm Crowell & Moring. “Banks will be in the middle of virtually all export transactions globally and are therefore a logical focus for BIS to identify potential export control evasion.”

But it may mean banks have to probe further than the documents presented as part of a trade transaction, he adds.

“If a bank provides trade financing via letters of credit then it might have access to some of that information in the underlying trade documents. If, however, a bank’s financing is processed via a wire, that classification information is not included in the Swift payment message, unless voluntarily included by the remitter in the notes field.”

He says unless Swift messages are altered to include fields where this information can be catered for, banks will have to focus on controls at the on-boarding or post-payment stage.

While banks are currently being “deputised” by regulators to help detect suspicious activity, they are also exposed to enforcement activity, Wolff says.

“BIS could directly pursue an enforcement action under a theory that processing a payment related to an export control violation could itself be an export control violation, though it has yet to do so, while FinCEN could pursue an enforcement action” for failing to report suspicious activity, he says.

“Many banks are also worried about their prudential banking regulators at either a state or federal level who may now begin including questions related to what controls a bank is implementing in their regular examinations.”

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Launched on October 8 during the Mena Supply Chain Finance Forum in Dubai, Key Trade Documents and Data Elements (KTDDE) addresses a critical pain point: the underlying transaction data is often the same at any given point along the supply chain, but, as a result of divergent commercial practices, standards adoption and national regulations, such information often ends up being inputted and rekeyed in a variety of different ways.

These duplicative data entries not only slow down processes and introduce potential for error, but also hold back interoperability across networks and trade platforms.

Although in an ideal world, each trade document would be produced in one single format that every user around the world would adhere to, in practice this is unlikely. As such, the DSI is taking a pragmatic approach to standardisation.

“Given the reality of multiple electronic versions of trade documents in existence, whether due to national regulations or commercial practices, the DSI Industry Advisory Board holds the view that DSI should continue to focus attention and encourage the alignment of standards for machine-readable data elements as a building block for interoperability across networks and platforms,” the report says.

To achieve this, the DSI’s KTDDE working group is mapping all of the trade documents identified in the Cross-border Paperless Trade toolkit, co-published by the World Trade Organization in collaboration with UNESCAP and UNCITRAL in 2022, as well as the information needed to fill them out, and identifying existing standards that can be used to harmonise each individual data element.

The eventual aim is to create a framework where data can be entered once and automatically populate across all necessary documentation without the need to translate it between different systems’ languages.

“By creating transparency and accessibility around trade documents and their core data elements, we aim to enable a more rapid digital transformation among industry,” says Pamela Mar, managing director of the DSI.

The KTDDE report scrutinises 14 foundational documents for transport and logistics, finance and payment processes – customs bonds, letters of credit, purchase orders, payment confirmations, export cargo shipping instructions, rail consignment notes, road consignment notes, sea cargo manifests, air cargo manifests, airway bills, seaway bills, ship’s delivery orders, bills of exchange and promissory notes. They join an existing set of seven documents studied in an initial report in March, bringing the total to 21 standardised references.

In the analysis, the KTDDE working group defines the attributes shared across these documents – sorted into 12 categories such as references, dates, transport modes and goods – into a key trade data glossary, taking as its base the United Nations Trade Data Element Directory, also known as ISO 7372.

By enabling a shared understanding and eliminating definition conflicts, the glossary ensures that the “who”, “what”, “where”, “when” and “how” of trade – such as the shippers, the goods, the destination, the date and the means of transport – are universally recognised, not just in one segment of the journey, but end-to-end.

“The DSl’s continued efforts to expand the understanding of digital standards in international trade represent a significant step forward in streamlining global commerce,” says Robert Beideman, chief product officer at GS1 and chair of the KTDDE working group. “By promoting data reusability and consistency across supply chains, we are facilitating more efficient and secure transactions for businesses across the globe.”

However, there is still some way to go before this near-utopian vision can be realised.

The report reveals significant variations in the level of digital readiness and interoperability among different document types.

Among issues identified are the absence of a consistent global standard for party identification in letter of credit transactions.

“Names and addresses, traditionally used for identification, do not align with the requirements of digital ecosystems, where precise identification is crucial. Establishing a universal identifier could simplify party validation, enhance anti-fraud efforts, and enable advanced analytics for combating financial crime,” the report says.

For bills of lading, there has been more progress towards standardisation and interoperability, with industry stakeholders like Bimco, DCSA, and FIATA aligning their standards to the UN/CEFACT Multi-Modal Transport Reference Data Model, which provides clear definitions of the data elements needed.

Purchase orders, meanwhile, remain largely unharmonised, with the DSI analysis finding that fewer than 200,000 companies worldwide utilise industry standards published by GS1 EANCOM and XML.

The absence of consistent, machine-readable data elements across these documents leads to multiple issues.

It affects the speed and reliability of transactions, creates barriers to entry for smaller players, and ultimately reduces the overall competitiveness of global trade operations. The transition to a fully digitalised trade framework is reliant on eliminating these disparities and fostering an environment where interoperability is the norm, not the exception.

The DSI is now calling for standards development organisations to ensure that their deliverables include data definitions that are semantically interoperable with those of others. It also recommends that industry and private sector actors implement globally recognised standards where they exist, adding that “a comprehensive digital transformation cannot occur unless all major links in the value chain collaborate”.

The KTDDE working group says it invites participants in the trade ecosystem to road-test its recommendations and provide feedback.

By the first quarter of next year, the group will deliver an analysis of the final batch of 16 key trade documents, before launching an interactive online tool that maps data and standards for the end-to-end supply chain.

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The ICC Banking Commission’s latest trade register, created with support from Global Credit Data and Boston Consulting Group, analysed data from 22 banks worldwide and covered global trade finance and export finance transactions with exposures in excess of US$23tn.

The report says that 2023 is proving to be “a more challenging year for trade finance”, despite inflation-adjusted goods trade growth of 2.2%, echoing results posted by Singapore banks earlier this year.

“Both a slowdown in trade flows and a further decline in product penetration are driving the lower volumes, as businesses prefer to go without financing products rather than pay the higher costs,” the report says.

This downturn marks a reversal of two years of post-pandemic revenue growth for banks’ trade finance business. In 2021, nominal trade and supply chain finance revenues surged by 28.2% year-on-year, while 2022 saw a further 6.3% increase to  US$63bn.

International goods trade flows rose 10.7% to US$23.8tn in 2022 – nowhere near the 25.5% spike in 2021 – but this was largely driven by inflation, not volume increases, the ICC says.

“In real, or inflation-adjusted, terms, goods trade flows grew only 3% in 2022 versus 2021,” the report says.

Jumps in commodity prices meant the energy, metals and mining sector grew 26.3% in nominal terms, while real trade growth in the sector was 12.4% in 2022. Commodities have since experienced deflation, the report says.

The 2023 edition of the annual trade register reiterates previous years’ findings that trade finance is a “low-risk asset class”, as part of the ICC’s ongoing bid to provide the evidence for this claim.

Default rates across all four trade finance products – import letters of credit (LCs), export LCs, loans for import and export and performance guarantees – increased in 2022 compared to 2021 “on almost all measures”.

They mostly remained below 2020 levels, except for the exposure-weighted default rate for import LCs – which reached its highest level since 2009 – and the transaction-weighted default rate for export LCs.

Both were regionally concentrated, the ICC says, with import LC defaults largely in China and Central and South America, and export LC defaults related to exposure to Russian banks.

Default rates for supply chain finance (SCF) payables finance on a transaction-weighted basis fell compared to 2021 levels, but on an obligor-weighted basis, defaults for SCF payables finance in 2022 rose “considerably”. This, the report’s authors say, suggests a small rise in defaults among smaller SME obligors. “It is possible that this was related to a weakening credit environment, as financing costs rose”, the report adds.

Looking ahead, high inflation and interest rates are expected to continue for at least a short time, while excess inventories – due to stockpiling during the pandemic – could also mean a dampened appetite for financing.

The ICC says that trade and supply chain finance revenues are forecast to return to growth next year, rising by 3.8% every year until 2032 to reach an estimated US$91bn.

It also flags an “industry pivot” from documentary trade to open account products and a move away from SCF due to newly introduced disclosure rules.

“We are starting to see some shift away from supply chain finance, partly due to uncertainty in the market about the detail of the regulation,” the report says.

“The impact of this adjustment has been larger than expected in last year’s trade register, as corporates have reported being more concerned than initially expected.”

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Under the deal, Attijariwafa Bank will extend confirmation lines to African lenders whose trade finance activity has been constrained by international financial institutions cutting correspondent banking relationships, the AfDB says.

The deal will help SMEs operating in several African countries gain access to trade finance instruments, it adds.

The bank notes there is “growing demand” for trade finance in several key economic sectors such as agriculture, renewable energy, manufacturing, health, telecommunications, as well as transport and services.

The agreement, the second of its kind between the AfDB and Attijariwafa, follows a similar risk sharing deal signed in 2019. Under the previous unfunded €10mn risk sharing scheme, Attijariwafa confirmed letters of credit issued by local African banks with the AfDB covering up to a maximum of 50% of the total transaction values.

The partnership comes amid growing concern over dwindling trade finance supplies on the continent. According to the Bank of International Settlements, a heightened focus by banks on regulatory, reputational and financial risks has led to a 29% decline in correspondent banking relationships over the last decade, leaving local banks struggling to clear funds, access foreign currency and conduct cross-border payments.

This de-risking is also a contributory factor to the global gap between trade finance supply and demand, which is estimated by the Asian Development Bank to have grown to US$2.5tn, a jump of more than 50% since 2021.

During a summit last month in Morocco, the head of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, called on multilateral development banks to grow their trade finance business in low-income regions.

This was followed by the publication by the Bankers Association for Finance and Trade of an updated version of its guidelines for respondent banks, to help them maintain their correspondent banking relationships amid an increasingly complex regulatory environment.

The post AfDB and Attijariwafa target African trade with risk-sharing deal appeared first on Global Trade Review (GTR).

The round was led by QED Investors, with the participation of new investor Nazca and existing investors Quona, Flybridge, Maya Capital and One VC.

Founded in Colombia in 2021 by Santiago Molina, Andres Ferrer, and Tomas Shuk, Finkargo aims to accelerate and fund international trade operations for SMEs in Latin America, with a focus on import finance. The company’s platform offers an automated credit scoring model, access to capital and logistics and financing processes, enabling small and medium-sized importers to boost sales and control logistics.

In April 2022 it received a US$7.5mn seed investment in which Quona, Flybridge, Maya Capital and One VC participated, followed by a US$75mn structured credit line from impact investment fund Community Investment Management in November.

So far, Finkargo is focused on the Colombian and Mexican markets, where it says it has “empowered over 250 customers to partake in global commerce”, extending financial support to over 2,000 import operations valued at US$200mn across a network of 430 suppliers spanning 40 countries.

“Because these are SME importers, they often don’t have credit terms with their suppliers because they don’t have any negotiating power,” Molina, the company’s CEO, tells GTR. “We give them the working capital to execute purchases, optimise their supply chains, negotiate better conditions, meet minimum order quantities and achieve a better negotiating position with suppliers all around the world.”

He adds that Finkargo provides lending directly, rather than acting as a broker, although it also offers third-party cargo insurance to importers through the platform, as well as additional services such as verifying suppliers and shipments.

“We have the merchandise as collateral, and we understand each one of the transactions and the logistics behind them because, unlike other specialty lenders, we’re logistics experts. We’ve brought together these two worlds to offer everything an importer really needs in order to operate efficiently,” he says, adding: “These are also not just net importers. In fact, 30% of our importers transform and export again, so we’re basically providing the oxygen to keep them connected to global value chains.”

With the new capital raised in this round, Finkargo now plans to further expand its operations in Colombia and scale up in Mexico.

Discussing the investment, QED Investors principal Camila Key Saruhashi points out that SMEs in Colombia and Mexico import over US$30bn in volume from Asia yearly but struggle to access capital to manage the 60- to 120-day gap it takes from payments to shipment arrival.

“The limited number of banks that have trade finance practices almost exclusively focus on large traders, given the historically manual processes associated with underwriting these types of loans,” she says. “Finkargo is bridging the gap by leveraging data and technology to offer an essential import financing product.”

“Demand is huge,” Molina says. “Mexico represents almost half of international trade for Latin America, but eventually we want to create an ecosystem for the entire region. There’s a lot to do beyond just giving access to capital, which is where we are starting to focus. Beyond insurance, we have business intelligence and data so that SMEs can make better decisions, and we are starting to partner with other players in the ecosystem like freight forwarders and customs agencies, to better optimise the flow of money and data.”

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