Earlier this month, Standard Chartered said it had made a strategic investment in Linklogis, a blockchain-powered supply chain finance platform based in Shenzhen, China.
As with most supply chain finance solutions, the key benefit is for smaller and medium-sized (SME) suppliers who gain access to finance because the platform lowers the financing risk. The larger enterprise buyers that bring their suppliers onboard these platforms are usually a client of a bank who provides the funding.
By using the solution, banks have greater confidence in financing the suppliers. The bank leverages its knowledge of the buyer and its credit history. They have proof the invoice is legitimate and visibility into the underlying transaction. For the buyer, there is increased transparency for its supply chain.
“Our strategic investment into Linklogis not only allows us to better serve our clients by being a part of their integrated ecosystem, it also reinforces our efforts to support China’s opening by facilitating the flow of capital, particularly for the Greater Bay Area,” said Benjamin Hung, Regional CEO for Greater China & North Asia at Standard Chartered.
There’s competition in that region, with a central bank-backed trade finance initiative targeting that area, the Bay Area Trade Finance Blockchain.
The Linklogis platform uses WeQChain, which is based on Tencent’s TrustSQL technology.
Prior to the Standard Chartered investment, where the amount was not disclosed, to date, Linklogis had raised more than $260 million in capital. The firm started in 2016, and China’s Tencent (owner of WeChat and WeChat Pay), was the initial investor and participated in all three funding rounds.
Linklogis secured $220 million in a Series C round in late 2018 led by the Singapore Government Investment Corporation (GIC) with high profile investors, including Tencent, Bertelsmann Asia, the investment arms of CITIC, and China Merchants Bank (CMB), and others.
CITIC and CMB are both privately owned and the only two Linklogis shareholder banks apart from Standard Chartered. They may not be the biggest banks in China at roughly ninth and tenth spots but are still very large.
Additionally, numerous other Chinese banks are strategic partners, including the biggest bank in the world, Industrial and Commercial Bank of China (ICBC). Apart from shareholders, other banking partners include CICC, Bank of Langfang, Suning Bank, SPD Bank, Bank of Shanghai, China Mingsheng Bank, Huaxia Bank, and Nanyang Commercial Bank (NCB).
In other news, Standard Chartered announced that Michael Spiegel has joined from Deutsche bank as Global Head of Trade.