Today Standard Chartered Bank announced a Singapore joint venture, Olea, with supply chain finance startup Linklogis, known for using blockchain. The target is institutional investors looking for an alternative asset class. We’ve asked whether these trade finance assets might be tokenized as digital assets, and the response was it is part of the plan.
Early last year, the bank invested in Hong Kong-based Linklogis, which mainly serves Chinese buyers and their suppliers, after first working with the supply chain finance company at the beginning of 2019.
As with most supply chain finance solutions, a large enterprise buyer onboards their suppliers to the platform. Because of the creditworthiness of the buyer and transaction verification, the risk is significantly reduced and blockchain adds another layer of transparency. It enables suppliers who might otherwise not be creditworthy to attract funding at an affordable rate.
It’s also a sector that has attracted institutions looking for different asset classes. Previously Linklogis had issued multiple asset-backed securities based on the credit granted.
Before Standard Chartered’s investment in 2020, Linklogis had raised $260 million, including a $220 million Series C round in late 2018 led by the Singapore Government Investment Corporation (GIC).
The CEO of Olea will be Amelia Ng of SC Ventures, and the deputy CEO will be Letitia Chau who is Vice Chair of Linglogis.
“By marrying Standard Chartered’s international trade and risk management expertise and unparalleled knowledge of Asia, Africa and the Middle East with Linklogis’ innovations in supply chain technology, Olea is uniquely positioned to reinvent trade finance and be a force for good,” said Ng.
“Olea aims to disrupt today’s trade finance model by matching suppliers’ financing needs with alternative liquidity from investors seeking a compelling asset class linked to the real economy.”
In recent months, Standard Chartered’s venture subsidiary SC Ventures has moved from taking minority investments to creating joint ventures in the blockchain and digital assets sector. Late last year, it created Zodia, a digital asset custody startup in London, in which Northern Trust is also involved. In June, it announced plans for London-based digital asset brokerage and exchange in conjunction with Hong Kong-listed BC Technology Group.
That’s why we raised the question about whether these trade finance assets might be tokenized as digital assets. “Every transaction will be in digital form and trade asset tokenisation is in its plan,” said a spokesperson.
Singapore is home to more than one blockchain-based trade finance solution with billions in transactions, including Triterras and dltledgers.