TFG reports live from Ho Chi Minh City, in an exclusive interview with Finacity CEO Adrian Katz, at FCI’s 51st Annual Meeting.
Supply Chain Financier, Greensill, most recently known for its $800m investment from SoftBank’s Vision fund, has today announced its acquisition of Finacity Corporation (Finacity). TFG recently reported on SoftBanks growth and vision to totally disrupt the supply chain finance, trade and receivables space, and this only cement’s their investment strategy to grow and disrupt at large scale.
Deepesh Patel spoke to Finacity CEO Adrian Katz, at FCI’s 51st Annual Meeting.
We feel like we want to be the fastest Cheetah and fastest Elephant in the jungle – and in the race to be the fastest and the fittest, by joining forces, together, we might race faster.Adrian Katz, CEO, Finacity
Greensill, valued at an estimated $3.5bn, also known to make huge strides in the working capital finance sector, adds Finacity to its family, which will be a wholly owned subsidiary of Greensill.
TFG’s Editor Deepesh Patel spoke to Adrian Katz, CEO and co-founder, live from Ho Chi Minh City.
Deepesh: Why the acquisition?
Adrian: “Greensill are a leader in supply chain finance; there aren’t many players in the market who have raised capital at the scale of Greensill, which really is an indication of their success and dominance in the market. For us, we’re a leader in the receivables securitisation industry. We have many clients that require receivables securitisation that would also benefit from supply chain finance programmes, and vice versa, so there are strong synergies between both companies. In terms of technologies, both Finacity and Greensill have the best in breed, which is good for both.
The intangible benefits are also important to consider. At Finacity, when we see a new opportunity or problem, we take the view that there is an innovative financing solution for structure out there, and since I met Lex Greensill, we felt that culturally, both companies had the same mindset, which is a positive can do attitude and culture.
Another interesting strength was our respective geographies. With Finacity’s headquarters and operations centred around the USA, and Greensill’s within the UK, there are lots of opportunities to expand operations both ways.”
Deepesh: Are the economies of scale and advantages in combining resources with Greensill Capital?
Adrian: “Some mergers involve cost savings, which means, reducing headcount and cutting operational costs due to economies of scale. This is not the intention for either Finacity or Greensill; there’s no intention to reduce headcount. The synergies between both companies are on the revenue and growth side as a result of this acquisition; we see additional revenue streams and opportunities whereby combining technologies within the supply chain finance and receivables securitisation structures adds value and efficiencies to both. On the new business side, with a bit of preparation and training, my origination team will also be able to sell supply chain finance, whilst at Greensill, they can look to selling receivables securitisation.
For Finacity and Greensill, we’re at either side of the mirror; in supply chain finance you have a single obligor with multiple sellers, whereas in securitisation, you have a single seller with multiple obligors. So by combining turfs and seeing the other side of the picture, there are certainly synergies in combining and offering both.”
Deepesh: We have seen a lot of acquisition and consolidation in the working capital finance markets, particularly in the UK in the past few months, is this an indication of a struggling industry?
Adrian: “Finacity are not struggling and Greensill aren’t either. For both parties, we feel like we want to be the fastest Cheetah and biggest Elephant in the jungle – and in the race to be the fastest and the fittest, by joining forces, together, we might race faster.”
Greensill Acquires Finacity
Greensill’s takeover of Finacity came shortly after SoftBank’s $800mn USD investment into Greensill, offering an opportunity for Grensill to expand it’s footprint into non-bank finance solutions in the UK.
Finacity has reputable clients ranging from Bunge to Delta; combining innovative big data analysis of millions of invoices with experitise around securitisation structures which can be presented and financed by a bank or insurer. For clients, there is a growing demand for the off balance-sheet treatment of trade and receivables finance, which places Finacity to help grow their trade lines without impacting existing bank funding relationships.
We recently spoke to Finacity’s Charles Nahum, in our latest edition of Trade Finance Talks, in the state of receivables securitisation markets and trends in 2019.
By combining Finacity’s core securitisation expertise with Greensill’s broad range of financing solutions and deep, diversified funding sources, the partnership will enable a superior and comprehensive set of best-in-class financing solutions to solve an even broader range of client needs. Greensill will immediately expand the range of products and services available to both firms’ clients while Finacity will continue to deliver its exceptional services as a distinct operating company within the Greensill group under the continued leadership of Adrian Katz.
Finacity’s notable founding shareholders include Bank of America, ABN AMRO and Euler Hermes. The relationship is non-captive allowing Finacity to partner openly with investors, insurers and other service providers best suited to the client. Now 18 years since Finacity was created, Finacity currently facilitates the financing and administration of an annual receivables volume of approximately US $100 billion. With resources in the USA, Europe and Latin America, Finacity conducts business throughout the world with obligors in 175 countries.