TIDMSYME
RNS Number : 5074Z
Supply @ME Capital PLC
21 September 2020
21 September 2020
Supply@ME Capital plc
(The "Company", "SYME" or "Supply@ME")
Strategic inventory funding agreement for up to EUR8bn over five
years
with acquisition of Bank in Europe
Supply@ME Capital plc, the innovative fintech platform which
provides a unique, market leading Inventory Monetisation(c) service
to European manufacturing and trading companies, is pleased to
announce that it has entered into a strategic agreement
("Agreement") with a leading European Alternative Investment Firm
(the "Financial Partner") and SYME's shareholders, 1AF2 S.r.l. and
The AvantGarde Group S.p.A. ("Co-investors"), to acquire a bank in
Europe (the "Bank"). The core objective of the transaction is to
support and facilitate the rapid growth of the Supply@ME platform,
with the full support of the Central Bank within that
jurisdiction.
As part of the Agreement, Supply@ME will give the Bank
pre-emption rights to invest in each securitisation note issue and
other funding programmes, to support the Platform as it grows. In
return, the Bank will provide up to EUR8bn of funding over five
years, to support inventory funding across all of SYME's
international operations. The Financial Partner has committed to
recapitalise the Bank immediately following the completion of the
Central Bank's regulatory banking authorisation process.
The Agreement delivers on the following strategic
objectives:
- the Bank will remain independent, owned by the Financial
Partner and the Co-investors. Supply@ME will not be a Bank
shareholder and it has no costs relating to the transaction.
Control of key operational roles will be given to The AvantGarde
Group who will be responsible for selecting the Bank's CEO, whilst
governance supervision will be overseen by the Financial
Partner
- the Bank will provide "banking-as-a-service" to Supply@ME in relation to:
o subscribing to all funding note issuances in line with the
Bank's capital adequacy targets which have already been agreed,
o funding across Supply@ME Group's international operating
regions, subject to country specific banking licence restrictions,
and
o co-investing with institutional investors in securitisation
notes issued by the Platform, in order to provide additional funds
for inventory monetisation, in accordance with the Company's
multi-channel funding strategy
- the Bank's indicative cumulative inventory funding targets are estimated at:
o EUR4bn by the end of 2021
o EUR5.5bn end 2022
o EUR7bn end 2023
o EUR8bn end 2024
- the funding costs to Supply@ME will be lower than the current
costs borne by the Platform for its "open funding"
securitisation
- the Bank will also be the "partner and banker of trust" for
SYME, whereby all bank accounts set up for inventory monetisation
transactions will be held at the Bank. This will serve to reinforce
monitoring processes, digital integration and security
- the Bank can hold up to 2% of SYME share capital, including
purchases through the market subject to MAR and other regulatory
approvals
The Central Bank regulatory approval processes relating to the
acquisition of the Bank are underway with the support of the local
banking regulator. However, until such regulatory and contractual
processes have been completed, the parties have stipulated that the
name of the Bank and Financial Partner cannot be announced. The
Financial Partner is a regulated investment manager in Europe which
operates in the private equity and private debt markets. It has
raised and invested more than EUR2 billion from institutional and
retail investors.
The impact of the Agreement on the current business plan of
Supply@ME is transformational. The completion of the acquisition of
the Bank will facilitate a major increase in the quantum and speed
of the Platform's estimated capital inflows for inventory
monetisation, since securitisation notes and other funding
structures can now be subscribed by SYME's partner Bank.
Specifically:
- an increase of target inventory funding from the initial
business plan's EUR4bn, to at least EUR8bn at the end of the
business plan period in 2024
- exceeding the 2020-2021 (year-end Sept 21) EBITDA target
- more rapid expansion within the Platform's target geographic areas
- enhancement of the servicing fee net margin (the difference
between client company fee received by SYME' Stock Company and the
operating and finance costs of the securitisation notes) from
approximately 2% to 3% of the total value of inventory monetised.
This implies a potential profit margin improvement of approximately
50%
- given the more competitive funding rates that will be made
available to SYME, an ability to offer lower client company
servicing fees, on a risk adjusted basis, to higher investment
grade companies
- banking support from SYME's partner Bank for client company
due diligence activities to further accelerate the on-boarding
processes and scale-up of the business
Following this significant upgrade to funding, through its
"banking as a service" strategic partner, SYME will be able to
accelerate the funding initiatives previously announced as
follows:
- the Bank partnership will fast-forward the funding of
inventory monetisation for those client companies which do not form
part of the initial StormHarbour EUR300m portfolio
- it will deliver additional inventory funding in the UK working
together with its UK capital markets partner on the first portfolio
of UK Client companies
- it will enable improvements to the self-funding agreements
being negotiated with two Italian banks, to create more synergies
and integrations with SYME's new partner Bank
- the Company can now analyse new financing structures using
direct borrowing lines from the Bank to monetise inventory (and
consequently increase monetisation to above EUR8bn), whereby
securitisation notes could be structured in tranches (a senior
lower risk tranche for institutional investors, and, a junior
first-loss higher risk tranche for the Bank)
Alessandro Zamboni, SYME CEO, commented "This strategic Bank
partnership is a significant addition to the Company's existing
funding initiatives. Our objective has always been to form
partnerships that would enable us to exceed our funding targets,
and this agreement achieves that at one stroke. Our business model
is highly scalable, subject to access to capital, and to client
companies. With this new Bank partnership and the other on-track
initiatives, we now have capital and client companies.
"We are moving into an economic environment where
recapitalisation of companies and other forms of capital injection,
such as inventory monetisation, will need to be considered. SYME
provides a service that is comparable to an equity recapitalisation
with better funding costs and the absence of any equity dilution.
Our new Bank partnership will mean that we have two important key
barriers to entry protecting us in this untapped inventory
monetisation market: a unique capability to analyse and monitor
inventory, and a competitive cost of funding through which to
monetise it. We're delighted with this big step forward and are
enthusiastic to push ahead with the next phase of SYME."
This Announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014.
Notes
Supply@ME enables businesses to generate cashflow, without
incurring debt, by monetising their existing stock. Before a
business has found an end-customer for its inventory, the Supply@ME
platform enables them to sell ("monetise") their stock and receive
cash immediately to boost their working capital. The Supply@ME
service enables strong companies to improve their working capital
cycle. SYME does not monetise inventory for companies in financial
difficulty or with inventory that they are struggling to sell.
Contacts
Alessandro Zamboni, CEO, Supply@ME Capital plc,
investors@supplymecapital.com
Paul Vann, Walbrook PR Limited: +44 (0)20 7933 8780
Brian Norris, Cicero/AMO, +44 (0)20 7947 5317
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