Hong Kong-based Assured Asset Management says it is ready to launch its blockchain-based service for supply-chain finance, with two anchor corporations slated to begin using it by early October.
Assured CEO Robert Cheung declined to name the anchor users but says one is a real-estate company and the other is a manufacturer.
The product launch comes with a rebranding of a fintech previously known as FinexAsia, co-founded by ex-Citi risk officer Maggie Ng, which began operating in 2017 sourcing U.S. unsecured consumer loans from American peer-to-peer networks and making those available to investors in Asia and elsewhere.
The team decided its investor base, as well as the supply chains it is now targeting, are too global to warrant a brand name tied to Asia.
The firm now has about $300 million on its platform from investors directly accessing loans or doing so through a company-operated fund. But Cheung says AUM isn’t the best metric for a supply-chain finance business, which is more about volumes of transactions.
He declined to say what kind of activity the team expects to generate, but Assured hopes to have up to 10 suppliers of the two anchor companies on board by the end of the year. And they are pitching more anchor prospects.
The company’s tech team, split between Argentina and Guangzhou, China, has spent the past year building the supply-chain operation based on an in-house distributed ledger.
The first stab at this was actually made by Chinese P2P firm Dianrong, whose founder, Soul Htite, is now a technology advisor to Assured. Htite also helped set up Lending Club in the U.S., and the two tech teams are part of his legacy. Assured A.M. does not have a formal relationship with Dianrong now, as it developed its own platform.
Angie Lin, CIO and co-founder, says the lengthy period between that first attempt and the impending launch this year is due to the need to develop a much more sophisticated technology, one that could handle cross-border activities, and extend itself deeply through tiers of suppliers and distributors.
“This is version 3.0. We skipped 2.0,” she said. (Lin was formerly head of asset management at AMTD, which is a shareholder in Assured.)
She says the pain point for anchor corporations was not about financing. Rather the blockchain-based service is to help them run operations better, with financing an additional benefit.
“Name brands want to track and control production sales,” she said, citing the example of, say, a French winemaker that is concerned about distributors selling fakes in emerging markets. What they want is greater visibility into suppliers, product provenance, and where products sit in the distribution chain.
We skipped version 2.0Angie Lin, Assured A.M.
Suppliers, which are often strapped for cash, must agree to provide this sort of data on the platform in return for the ability to use it to import the anchor company’s credit profile. That makes them a safer risk to liquidity providers such as corporate banks and asset managers.
Banks will already be providing credit facilities to the multinational anchor companies. Those corporate treasury departments may not necessarily need to borrow from banks, but if they have credit limits, they could now use the Assured platform to extend loans directly to their suppliers, if they wish. Digitalizing the process makes it easy for those anchors to fractionalize their credit lines, so as to make appropriately smaller loans to their smaller SMEs.
Or they can simply use the platform to make it easier for their suppliers to obtain funding from banks or asset managers.
Our platform is creating a new capital marketRobert Cheung, Assured A.M.
Cheung says the risk-return profile of SMEs on the platform should be similar to that of unsecured consumer loans, but of much shorter duration. Typical invoices mature in 30 to 90 days, whereas the average duration of a consumer loan on Assured is 18 months.
“Our platform is creating a new capital market,” Cheung said. After the platform attracts enough users, Assured will also launch a fund to invest itself in these instruments, on behalf of third-party clients.
The business makes money by taking a cut of the financing made on the platform. It does not require a license in Hong Kong – Cheung describes the business as “a technology company with asset-management experience” – but in China it had to get an Internet Content Provider license, and it may need to obtain more permissions as required in a given jurisdiction.