Thu, Oct 28, 2021
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

New trade finance fund aims to help European SMEs

Tuesday, October 12, 2021

amb
Andreas Schweitzer
B. G., Opalesque Geneva:

Trade finance serves as the lifeblood of day-to-day international trade by providing the fluidity and security needed to allow goods and services movement. Trade finance is known to be particularly vulnerable in times of economic crisis. During the COVID-19 crisis, the OECD has observed that exporters have been facing difficulties accessing short-term financing in the private market. Last year's trends suggested that even though commercial lenders may have adequate liquidity to provide funding to exporters, their risk appetite may have diminished, resulting in the limited availability of trade finance. That's even though trade finance is considered one of the safest asset classes to invest in even during turbulence. Corporate lending, for example, is statistically riskier than trade finance lending. So now is the time for bold lenders to come into the trade finance market and bridge that gap.

One of them is Artis Trade Invest, the new trade finance fund managed by Arjan Capital, that aims to enable trade by shortening exporters' working capital cycle and extending it for importers. This is done typically by entering a sale and purchase agreement of a highly liquid and non-perishable good or by financing open accounts with high-quality debtors mainly based in Europe.

Launched by a trade finance veteran

Artis Trade Invest is a first-time trade finance business based on the proprietary trades of Andreas Schweitzer, Arjan's managing director. Schweitzer has been in trade finance since the mid-80s when he worked for the Jacobs Suchard Group and its trade finance banks across Latin America. Since 2009 Andreas Schweitzer has assisted mid and large-cap companies with their trades with Central Asia and now, as the trade finance shortage is also felt in Switzerland and the EU, he mainly concentrates on European trade.

Andreas Schweitzer is the author of the book "Trade Works", which will be published by Simon&Schuster by the end of 2021, and which brings the trade investment asset class closer to the general public. He will present in the Small Managers BIG ALPHA Episode 4 webinar on October 21st.

The investment models are (a) Liechtenstein SICAV AIF in the process of incorporation (b) a listed bond and (c) managed accounts. Artis will specialise in helping European small and medium-sized businesses (SMEs) trade with global markets. The fund's target size is €250m, and its expected returns are about 6% p.a. net of fees.

Artis will focus predominantly on enterprises with clear developmental potential and established relationships with national and cross-border buyers that display a proven track record of delivering products that meet the highest quality standards in their respective markets. Yet, those enterprises are underserved by private banks. Risk is managed with credit insurance, recourse, and other guarantees.

The trade finance gap

"Some 80 to 90 percent of world trade relies on trade finance," has said the WTO (World Trade Organization).

According to Arjan Capital, the term "trade finance gap" wasn't in the headlines or prominent in the news until the world witnessed the financial crisis of 2008. The aftermath of the 2008 crisis brought an environment of new trade-related sanctions, regulations, strict lending policies, the rise of fintech and much more. As a result, financial institutions and banks started to reduce the lending options available to SMEs, thrusting the trade finance gap to centre stage.

Ever since the term 'trade finance gap' was first coined, the trade finance rejection rate for SMEs has remained above 50%, and it is only rising with time. The ICC (International Chamber of Commerce) estimates that up to $1.5 trillion of trade finance applications are rejected each year globally. The main culprit is the tightening of regulations. With it, the related cost of the transaction now suffocates the trade.

COVID-19 worsened the already present drivers of the trade finance gap. The lack of trade financing available continues to hamper the recovery of the economies around the world. Although organisations worldwide have started taking measures to slow down the widening of the trade gap, according to the ICC, a possible $5 trillion is needed to enable rapid recovery from COVID-19 and help small businesses survive.

This 'trade finance gap' presents an excellent opportunity for investors to help bridge the gap, make an impact and capitalise on an underserved market whilst generating stable ROI (return on investment).


Arjan Capital Ltd is a London-based Central Asia and Middle East-focused M&A, corporate finance and trade advisory boutique, authorised and regulated by the UK FCA since August 2015.


Next webinar:

Small Managers - BIG ALPHA Episode 4
When: Thursday, October 21st at 10:30 am ET
Free registration: www.opalesque.com/webinar/

With larger quantities of capital chasing the same Alpha strategies and continuing to erode Alpha, savvy investors are turning to smaller and/or emerging managers as they look for alternative sources of return.

We are proud to present you Episode 4 of this groundbreaking webinar series with the following carefully screened panel of investment managers:
- Heeten Dosch, Doshi Capital Management
- Craig Reeves, Prestige Funds
- Randy Baron, Pinnacle Associates
- Andreas Schweitzer, Arjan Capital

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Institutional Investors: Vanderbilt University endowment records 57.1% return for fiscal year, MIT endowment logs 55.5% return for latest fiscal year, AP1 re-tenders $720m emerging markets small-cap mandate, Harvard, world's wealthiest university, sees endowment soar to $53.2bn, San Francisco shifts passive equity mandate to active BlackRock ESG strategy[more]

    Vanderbilt University endowment records 57.1% return for fiscal year From PIonline.com: Vanderbilt University's endowment returned a net 57.1% in the fiscal year ended June 30, according to a financial report on the Nashville, Tenn.-based university. The report did not provide benchma

  2. New Launches: Massar Capital launches new global discretionary strategy, White Oak closes latest direct lending fund at $1.3bn, Aterian replicates speedy fundraise to collect $830m in nine weeks, Sofinnova holds $548m final close for Capital X, Multicoin Capital targets $250m for third crypto VC fund, Tobam launches French bitcoin and blockchain fund[more]

    Massar Capital launches new global discretionary strategy Massar Capital Management has launched a new discretionary macro hedge fund strategy which aims to capitalize on directional trading opportunities across a broad set of global markets. The Massar Macro Directional is the N

  3. How Viking Global became the hedge-fund industry's hottest launch pad[more]

    From Business Insider: Since Dan Sundheim's massively successful launch of D1 Capital in 2018, there have been six more spinoffs from Viking Global that have collectively raised billions - and at least one more is in the works. Among them: Grant Wonders, 31, who launched Voyager Global this ye

  4. PE/VC: Moody's warns of 'systemic risks' in private credit industry, Sequoia to restructure itself away from traditional VC model, Modeling private equity market beta, VC investors pour money into Chinese start-ups despite regulatory crackdown[more]

    Moody's warns of 'systemic risks' in private credit industry From FT: The burgeoning private credit industry of lending to buyout groups has grown to about $1tn, but opacity, eroding standards and the difficulty in trading these slices of debt pose "systemic risks", according to rating

  5. PE/VC: Private equity M&A frenzy has cautious undertones, Venture capital exit values soar, Private equity and venture capital drove outsized returns at Bowdoin, Harvard, and the University of Pennsylvania, Private equity tops explosive tech growth as returns rocket[more]

    Private equity M&A frenzy has cautious undertones From Reuters: Private equity dealmakers are in two minds. Buyout barons, led by titans like Blackstone boss Steve Schwarzman, are on track for a record year for takeovers. Yet they're also offloading companies at a much faster pace than