You can be forgiven for missing a value fintech proposition that launched a successful IPO, moved headquarters, doubled its client base and powered through the pandemic without breaking sweat. Overlook it a second time and you’ll miss out on the bargain of the year. Supply@ME Capital (LSE: SYME), an Italian financial technology venture now based in London, matches companies looking for new capital with funders looking for new investments. The twist is, it uses a blockchain-powered securitization platform to monetize that company’s own inventory, putting it up for “true sale” to a special purpose vehicle created by SYME. The client company buys its own inventory back with a percentage on the top going to the fintech firm, and the investors who bought unto the SPV.
SYME made headlines in small-cap media earlier this year when its share price jumped 1100%. It has since returned to the £0.40 range, but we’re expecting the rocket to take off again in January.
The IPO heralded a £227.5m cap and free float of 26% to London’s Stock Exchange in March, following the reverse merger between Italian fintech Supply @ Me srl and Abal Group that gave birth to SYME.
Eight months on, the average monetization deal struck by SYME is £15 million, and it is regularly working with businesses that have £1 billion in assets. No SYME client books under £100 million in revenue, and the potential for further business and long-term partnerships with the companies it is helping to grow is a positive sign.
Digital securitization prospects have grown in popularity over the last decade as a quick and easy solution for companies looking for capital and investors seeking consistent yield. Where SYME differs is it is not securitizing contracts or leveraging its own balance sheet; its not a lender. It carries zero risk on that front, and there is plenty of evidence it has robust due diligence processes in place when selecting the companies to work with, as they will ultimately be putting their own inventory for sale. What follows is a “true sale” of the stock inventory to a special purpose vehicle (SPV) incorporated by SYME. Businesses are lining up to convert dormant warehouse stock into liquidity.
Echoes of 2008
There’s no escaping the business impact of coronavirus in the short-to-medium, and next year supply chains are predicted to experience a similarly rough ride as new systems and checks bed in. Verticals likely to struggle through 2021, such as food, wholesale, medical supplies, will be balancing inventory requirements with a need for faster liquidity and growth. The opportunity exists for an alternative monetization platform to disrupt traditional lending to businesses in these fields. In the same way shadow banking grew out of the 2008 crisis, we’d expect a glut of monetization offerings to emerge to serve businesses grappling with Covid. SYME is the most attractive offering by a stretch.
SYME recently announced a deal with a European lender to launch a Shari’a compliant version of its inventory monetization platform. Having long spoken of its intent to push into the Middle East and Asia, it has wasted no time. The move should be a flashing sign for investors that big things are about to happen and equally impressive coming through a period where many of its contemporaries are scaling back. It has inked a deal with an ME technology firm that will help market and distribute the product across the Gulf to an emerging market of more than 300 banks. There is a $3 trillion play at stake. Activity in the region is predicted to step up from Q2 2021.
Similarly, in the US, SYME is in business with Anthony Brown and The Trade Advisory, and is growing its presence across multiple key states. A line between both moves can be traced back to London. The upside of moving to the UK capital pre-IPO is the increased proximity to the world’s largest lenders, and many other fintech firms and talents. It also raised the profile of the firm at a time when the UK’s world-leading financial services market began to evolve ahead of Brexit. Outside of the European Union, London’s banks are having to rethink their offerings, and we are likely to see an emerging market of sorts break out inside the Square Mile, powered by fintech.
SYME’s strategy of targeting areas with strong banking industries has proved a winning strategy, and evidence of sharp leadership. Its gambles have paid off so far, and its growing reputation, flexibility and rigorous adherence to client screening should make it irresistible to lenders seeking 6%+ yield.