Waldo de Vleeschauwer, co-founder and former managing director of Africa Merchant Capital’s trade finance business, has launched Artis Finance, a London-headquartered alternative finance provider.
Artis is founded against a backdrop of growing market and regulatory pressure on traditional bank lenders, which de Vleeschauwer says has made it more difficult for companies of all sizes and sectors to access trade finance.
The company plans to partner with mid-market corporates looking to optimise their working capital arrangements, as well as businesses with over US$100mn in turnover and value-aligned organisations that can demonstrate sound governance.
“Bank lending is cyclical and glacial in nature, and like the natural world, we are going through a ‘glacial retreat’ phase with respect to lending in trade finance,” says de Vleeschauwer, speaking to GTR shortly after its formal launch in Q3, 2020.
That trend dates back to the global financial crisis in 2008, he says, when regulators forced banks to focus more on balance sheet-based lending and ratings agency-style assessments of borrowers’ financial health.
Coupled with shareholder pressure to maintain profitability in a low interest rate environment, banks “sacrificed transactional control, and this is where problems started to creep in”.
During 2020, fraud accusations emerged against several commodity traders, including Hin Leong and Agritrade in Singapore, which de Vleeschauwer says “could have been avoided, or at least substantially minimised, should banks not have lost sight of the importance of transactional control”.
At the same time, the effects of Covid-19 containment measures have “certainly accelerated the retreat” from traditional trade finance lending.
“Although alternative credit funds have filled some of the gap left behind, banks have dominated the space, and still do,” he says.
“However, it is clear from recent news that while some of the major players are still nursing their 2020 wounds, the gap for stable, cost-effective finance for global trade will only increase for the foreseeable future.”
Hoping to narrow that gap, Artis is taking an alternative approach to sourcing capital.
The company offers investors a listed, tradable bond that institutional investors can buy and then sell in the secondary market, de Vleeschauwer says, “rather than a fund where liquidity is a function of redemption notices and asset managers’ goodwill”.
Artis will initially focus on a receivables programme and an oil and gas offering, which is focused on working capital and balance sheet optimisation for receivables and payables finance.
Towards the end Q3 2021, it will prioritise its financial institutions strategy, which aims to provide a stable source of liquidity for emerging market banks, to support discounting letters of credit, confirmation lines and trade loans.
“We’re also in the middle of an impact programme, looking at supporting SMEs throughout Africa and Asia,” de Vleeschauwer says.
Artis is backed by TDR Capital, and has a close partnership with tier one investment bank Jefferies. As well as its London headquarters, the company has on-the-ground presence in Geneva and Singapore.
Dec 16, 2020