Finverity, the award-winning mid-market supply chain finance platform focused on emerging markets, today announces the launch of its fund manager functionality, a first in the supply chain finance industry ( SCF).
This makes Finverity the first SCF platform to seamlessly connect both institutional funders and fund / asset managers managing their allocations through separate accounts, providing full visibility and control over investments. . The launch of this feature fills a key gap in the market and is expected to lead to increased investor flows and liquidity in supply chain finance.
The problem of the SCF sector: fragmentation and lack of suitable investment infrastructure
Investors’ allocations to SCF are often channeled through multiple fund managers or intermediaries. This has led to industry fragmentation and a lack of visibility and standardization throughout the monetary chain. As a result, investors lack consistent and accurate reporting on all of their allocations. Despite multiple lessons and red flags, the most recent of the Greensill collapse, investors in SCF have so far lacked the required transparency and control over how their money is invested.
The traditional position of the banking sector as the main provider of finance for SCF has led to a lack of suitable investment infrastructure available to channel the increasing flows from sources of private capital to SCF as an asset class, particularly towards mid-sized companies in emerging markets, which is an area of focus for Finverity. These investors are increasingly drawn to the potential high single-digit returns coupled with the low risk that SCF can offer. A number of specialized non-bank investment groups have grown in recent years and now represent the 20% of the SCF market not controlled by the big banks, according to Oliver Wyman..
Finverity’s new functionality addresses one of SCF’s most pressing investment infrastructure needs to date: the lack of a fully transparent ownership, allocation and reporting system connecting end investors to their respective fund managers and to the underlying portfolio of debtors.
Finverity’s segregated accounts allow investors to retain full ownership and control of the funds and assets invested, while assigning responsibility for the management of investments to third parties (usually fund managers). The investment strategies of the third party are codified in sets of rules similar to an investment mandate, which are subject to the approval of the end investor. These are then hard-coded in the award process. Any deviation from the mandate cannot be executed via the platform without the consent of the final investor. Once approved, the end investor has full, real-time visibility into the most granular level of SCF and factoring assets, which is at the invoice level, while viewing at a glance the concentrations of its portfolio in real time.
Investors using the Finverity platform will benefit from a centralized view (dashboard) of all their underlying deployment channels (fund managers or direct investment), allowing them to compare performance between fund managers, monitor the portfolio concentration and have direct access to real-time reporting.
At the same time, fund managers also directly benefit from this improved functionality. By providing full visibility and real-time reporting to end investors, they are able to address investor transparency concerns as well as market themselves by sharing evidence of their track record and thus attract additional assets under management (AUM). In addition, Finverity’s platform provides fund managers with performance improvement tools such as internal digital workflows that enable better risk mitigation and real-time monitoring of debtor performance. Equally significantly, the platform provides automation of back and middle office tasks allowing them to increase AUMs in a sustainable and cheaper way while maintaining high quality control.
Viacheslav Oganezov, CEO and co-founder of Finverity, commented:
“Investing in SCF has always been difficult for institutional investors and private capital due to the lack of appropriate infrastructure and the fragmentation of the sector. We are looking to change this with the rollout of the new fund management functionality on the Finverity platform by seamlessly connecting various entities along the money chain and providing full visibility down to the invoice level.
Only by instilling the transparency and the right controls made possible by technology can we increase the flow of investment in trade and supply chain finance and make it an asset class. established outside the balance sheets of banks.
Alex Fenechiu, COO and co-founder, commented:
“The growing number of non-bank investors in the SCF market requires a specialized solution adapted to their needs, which are very different from those of the big banks. The launch of Finverity’s segregated accounts responds directly to the needs and issues that we have observed in the market. We were surprised at the number of investors who do not really know the overall return generated by their investments due to the lack of consolidated reporting systems available, and only have access to data on the amount they are reimbursed.
With transparency and real-time reporting as pillars of our design process, the launch of Finverity’s separate accounts is another step in the right direction for the SCF industry. The one that will be very expensive and long to reproduce for our competitors ”.