Today Swiss-based Komgo said it had acquired Canada’s GlobalTrade Corporation (GTC) for an undisclosed sum (more later). The acquisition rounds out the marriage of the customers and the banks onto the same trade finance platform. GTC brings on board its 120 large multinational customers and their 11,000 subsidiaries that use its trade finance solutions.
On the other hand, Komgo has a dozen banks as shareholders in its blockchain trade finance network.
Both companies are heavily focused on digitizing the Letters of Credit process. Komgo positions itself as a commodities trade finance platform. Many of GTC’s clients appear to be industrial, although they likely buy large quantities of commodities. Several of Komgo’s investors are active in the commodities markets, particularly oil, with the likes of Shell, Total, Mercuria and Gunvor.
“Together, Komgo and GTC will provide the widest coverage, and biggest volumes for our corporate and bank users,” said Souleïma Baddi, CEO of Komgo. “We are combining Komgo’s commodity expertise with GTC’s industry expertise, consolidating the market for digital trade services. Trade finance is moving to a digital framework, and we’re proud to be at the forefront of this transition.”
GTC’s clients include manufacturers Airbus, Daimler, Ericsson, Siemens, Volvo and Vesta, defense contractors MBDA Missiles systems and SAFRAN, and tech firms IBM, Microsoft and Nokia.
For Komgo, this isn’t its first acquisition after acquiring another commodity trade finance platform TRAFEC in 2020.
In June 2021, Komgo announced its latest funding of CHF 26 million ($27.5 million). Based on the following logic, we speculate the acquisition cost was a similar amount.
The share register showed an increase in capital of 6.75 million shares in June 21, implying a possible valuation of CHF 3.85 per share. Two weeks ago, an additional 6.9 million shares were issued for an unknown amount. Using the June 21 valuation would give a figure of CHF 26.5 million. That provides a highly speculative ballpark for the acquisition amount.
“The industry has been waiting for this consolidation,” said GTC’s Chairman of the Board, Jacob Katsman. “Together with Komgo, we can now connect corporates to all their financial institutions for trade finance irrespective of what back-office system they use. Solutions offered by both companies are complementary and cover the complete range of payment instruments used in international trade.”
In addition to consolidation, the trade finance sector has also seen some recent closures, including bank-backed blockchain platform we.trade. Yesterday Maersk announced that shipping blockchain TradeLens would shutter.
Despite the bad news, there is still huge potential in the sector. Trade is in the early stages of the digitization process. A key piece of paperwork for Letters of Credit is the bill of lading when a ship is loaded. Last year just 1.5% of bills or lading were digital as eBLs.
Bank shareholders in Komgo include ABN Amro, BNP Paribas, Citi, Credit Agricole, Credit Suisse, ING, MUFG, Natixis, OCBC Bank, SMBC, Societe Generale, and RaboBank.