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TradeFlow acquisition news will tie in with USA business update as AZ mentioned Tony Brown is working on monetization in transit
Thanks for this :
.."a purchase contract for the commodity from the supplier at a fixed price (on behalf of the end buyer) and an onward sales contract to the end buyer at a fixed price..."
and TF keeps any difference between the two, presumably.
Nice and tight.
The fund simultaneously enters in to a purchase contract for the commodity from the supplier at a fixed price (on behalf of the end buyer) and an onward sales contract to the end buyer at a fixed price.
The Fund requires prepayment fees from end buyers to ensure the Fund has a price risk buffer that in the very unlikely event the end buyer does not pay the balance due payable for the commodity upon delivery, the Fund has some price buffer and cash available to cover potential costs of selling the commodity to another buyer and recovering the original investment made by the Fund.
https://tradeflow.capital/risk-philosophy/
TradeFlow looks to be a bit of an iceberg from a valuation perspective :
(1) The visible bit is the $ 40m funds under management that finance the period of 'inventory in transit', for which TF charges (a) a management fee of 1.5% pa, so $ 600K and (b) a 'success fee' of 15% on 'any increase in capital (highwatermark basis)'. It's not clear how what is basically a 'money market' fund (remember : 90 day redemption) would grow in capital value, unless (perhaps) it gets a slice of
(2) The 'out of sight' bit is whatever TF charges for its intermediary role : remember, it actually owns the goods and from what I've seen it appears that they're using transferable or back-to-back letters of credit in the process.
My guess - and it is a guess - is that TF is making a pretty turn as it inserts itself as interface/middleman and makes viable the connection between exporter and importer.
Suppose that exporter (a) has rice at cost 80 that it is willing to sell to importer (c) for 100, which importer/retailer plans to sell for 150. Traditional bank mechanisms , finance and procedures are slow and expensive (particularly as a %age of TF's typical $ 200K transaction size).
TF's highly automated structure enters at point (b) and addresses all of the above - making a perhaps otherwise uneconomic transaction viable.
What might that be worth ? At a guess 3-5% flat , taken from one side (a) or the other (c) - or maybe a bit from each, depending on strength of respective negotiating positions.....both sides are 'motivated' because the alternative is (likely) no deal at all.
TF has said that most deals are 60 to 90 days, ie 4-6 x per year, that would mean 12% to 30% pa on the $ 40m, say $ 4.8m to $ 12m.
This is gross income, not net, but still.....
If you put (1) management fee $ 600K on 15x = $ 9m and (2) intermediary fee, say net $ 5m on 10x , you get to about $ 60 m valuation for TF.
The big variable is (2)and could be materially overstated ( eg costs of 'inefficiencies'/ corruption at the chokepoint ports at either end). I've no idea.
But, funnily enough , 12.5 billion shares at 0.4p works out at around $ 70 million..
So maybe in the ballpark, if it is a plain vanilla acquisition.
All just a Sunday morning 'wild-assed guess'.
Tradeflow research thread
https://twitter.com/SimonWoodford3/status/1380809638556352513?s=19
Interesting nobody is challenging the 40M, 2% post, but I guess everybody knows that does not reflect the way that 40m is used in TFs model...
Still all we can do is place our bets, and wait, hopefully there is another word which is more "WILL" than AZs previous "will"..
Well I must if missed that but If anyone abused you lex its because of who you are and how you conduct yourself and have done for many months.
But you know its going to happen when you post and is a very large part of why you do so ey.
"when I posed this question the disciples ridiculed me for asking a question and dwelling on boring detail - must be a troll - nah it’s got to be worth 10p regardless of the real facts."
No they never lex, people just ignored you expecting you were leading somewhere sinister with it as you usually are.
Your question was "let's guess the value"
Your such a ray of light
If tradeflow funds under management are USD40m as quoted by Bloomberg then it is unlikely to be breaking even - given gross margin at say 2% would be less than USD1m and corporate costs would likely exceed this amount. But 40m of funds under management is 40m more than syme currently has.
Its an acquisition, mainly to acquire the "in-transit" part of the business, probably the investment funds too.
He may discard some TF functions.. Just got to wait and see..
The acquisition will allow SYME's Platform to complete its global offering, by monetising inventory (in particular, commodities) "in-transit". Not least, it would generate a number of attractive synergy benefits for SYME from both a funding and customer origination perspective.
Do you think the transaction with Tradeflow is a reverse takeover? SYME done that already before.
What does syme have that tradeflow doesn't? An overvalued, and listed, share price. That's why this deal makes sense to syme. They get to buy a small business with a viable business model. And can use overvalued paper as consideration. What will be interesting to learn is the restrictions on sale of syme stock that the sellers of tradeflow receive. They won't want to be locked in for a long period. But if there are no restrictions they will want to start selling some of these shares - which will lead to further pressure on the share price. They are industry experts and will be well aware that syme has been ramped and the share price is overvalued.
However the good news, if the deal goes through, is that syme shareholders will at least have some viable business underlying their investment. Let's be honest the fact that syme has yet to complete a single transaction, after a year of trying, suggests that their current business model may not be viable. I knew that at some point I would be able to post a positive message.
I think the market would see it as another thing that AZ couldnt get over the line, which is why its important at this time imo.
"But.. its not over the line yet. If it falls through i think we'll get absolutely crushed in the SP. That does make me feel a little edgy!!"
Why would it crush the SP, its not like its built on it.
Tradeflow would have to raise £200m plus to buy out Syme. I doubt they would raise that sort of money to buy a company at syme's stage of development. In practice it will be the best option for a merger with owners benefiting financially and I guess directors having continued rolls on the board plus substantial share offers. Hopeful and Excited to see this develop.
Im as excited as i am nervous about Tradeflow. To me, they are everything SYME need to be in terms of branding and presentation (I even think the name Tradeflow is 100x better than Supply@me)
Its very intruiging that a business that appears to be at a much more advanced stage is willing to be acquired. This excites me, as it means SYME must have something they dont..whether thats funding options or advanced blockchain tech. Even if it means dilution or placing, having TF onboard is nothing but a positive.
But.. its not over the line yet. If it falls through i think we'll get absolutely crushed in the SP. That does make me feel a little edgy!!
"Once the captive bank phase is complete and with funding in place monetisation will commence, hence the more realistic time scale given by AZ."
.
It may well be that monetisation of the Italian client will start before the completion of the captive bank as stated by AZ in interview, it may not also, obviously.
Good posts Divvyup and Miker444
Argo, many thanks, Divvyup and cahoodle good posts and I second argo re- Divvyup's post in that these guys are at the top of their game, Susanne Chishti's CV is off the wall and includes a global FinTech best seller / lecturing at Cambridge and Warwick.
I looked at TradeFlow Board and they are equally impressive, if it comes off we have the best brains and experience in the FinTech business.
We will know soon enough.
atb.