The twin pincers of a no-deal Brexit and the Biden administration turning away from the UK in January will do little to hasten the rise of Supply@ME Capital (SYME). Trading between £0.60 and £0.70 this week after it fell from highs of £1.25, we’re expecting the fintech darling to catapult into the £12.50-£13.00 bracket in the coming 10 months.
Using a blockchain-powered securitization platform, companies looking for cash put their inventory up for “true sale” to outside partners drawn together as a special purpose vehicle incorporated by SYME. The result is immediate liquidity for firms who can put their static inventory to use with little downside. The business buys the inventory back over a set timeframe, adding between 4% and 6% on top for SYME.
An example: SYME frees up working capital for metal manufacturers who have purchased raw materials. As their product sits untouched in warehouses prior to becoming finished goods, they sell the inventory to the special purpose vehicle, with the transaction recorded on a blockchain.
Now, swap that metal manufacturer and for any business on the planet in need of quick capital. Natural energy, food retail, wholesale, aerospace, chemicals, the list is pretty much endless. These sectors have become beset with lengthy supply chain delays, and there is a growing cabal of companies sitting on large inventories with little room to otherwise monetize them.
After a year like 2020 it is easy to see why many are looking for new ways to get low cost loans without having to run the gauntlet with risk-averse banks. For investors, it is an attractive proposal; they buy the securitization notes in return for an interest payment (coupon), and receive their principal back when the inventory is sold to the end customer.
In leveraging a company’s own inventory as monetized assets, SYME is a service provider, not a lender. Currency and interest rate swings have little impact, and SYME’s balance sheet is not in play.
The Covid landscape
Post-Covid, world economy and supply chain economics are likely to be forever altered. Some hedging against a repeat of the pandemic is likely, whereas other investors are likely to spring back harder. Access to cash, fast, is the only game in town for many businesses who are hoping to survive first, grow later. Volatility across global markets plays directly into SYME’s proposition, with the expectant elevation on share price to follow.
Coronavirus has reshaped the world economy and supply chain economics may never return to pre-2020 days. Access to cash is becoming critical for a wide selection of sectors, and with inventories sitting unmoved. Businesses are struggling to make headway with traditional lenders who are becoming more risk-averse. The environment is set for a digital lender to emerge, offering a low-cost solution. Further volatility to global markets is likely to enhance the need for SYME’s proposition, with the expectant uplift on share price to follow.
Disruption to food, wholesale, chemical and energy suppliers is predicted to continue through 2021 as the threat from Covid-19 ebbs and flows. In Europe, the demand for alternative capital is soaring as trade concerns, regulatory headwinds, and Brexit concerns are combining to diminish the access of London’s financial services sector to the European Union market. While the incumbent lenders figure out their next move, SYME is fixed to capitalize while regulatory access is worked out.
Believe the hype
Despite the noise, blockchain use cases have been few and far between. SYME’s ledger is perhaps the most intriguing and noteworthy use of the technology in action outside of crypto.
The ledger provides stability and security to both parties to the transaction, logging the inventory and recording any changes and providing the most accurate picture possible. Any alterations appear immediately. It is worth noting that the bigger picture for SYME, or any potential investors, is the proprietary technology being leased to larger companies in future.it may be a decade or so down the line, but the potential payout is huge.
The most startling aspect of SYME’s rise is the face it has not dipped into risky bets. It has shown caution when researching and onboarding clients, and while that number has doubled inside a year, each has gone through a rigorous selection process. This caution was rewarded with an enormous share price bump. While SYME has returned to earth since the giddy days of August, £0.36 is pitiful for what the company is likely to be worth in six months’ time.