Greensill is setting its sights on working capital finance in Latin America, a market it estimates could be worth as much as US$750bn, through the acquisition of Colombia-headquartered fintech firm Omni.

The London-headquartered supply chain finance giant says opportunities in Brazil and Mexico are “first on the list”, alongside plans to take advantage of Omni’s presence in Colombia and Chile and existing Greensill projects elsewhere in the region.

“The big, global non-bank supply chain finance players have had very little exposure in the region,” founder and chief executive Lex Greensill tells GTR. “It’s dominated by the large local banks, and there really isn’t the same level of fintech activity that we see in North America or Europe.”

Greensill’s Latin American operations will be run by Diego Caicedo and Andrés Abumohor, who founded Omni in Bogotá in 2018.

Since then, the company has provided financing worth US$300mn to more than 5,000 businesses, predominantly targeting SME suppliers to large corporates. The value of the acquisition has not been disclosed.

The decision to target businesses in Mexico and Brazil is in part driven by the size of those markets – the duo are Latin America’s two largest economies and most populous nations – but also by their widespread use of electronic invoicing and centralised digital company registers.

“That market is leading the world in the adoption of electronic invoicing, and the national registers that support that electronic invoicing. We think those structures are going to come to the rest of the world in time,” Greensill says, explaining that digitising company data allows greater use of AI, quicker supplier management and stronger fraud prevention.

“There’s some really interesting stuff going on in Latin America that’s actually well ahead of what we’re doing in the major markets.”

A paper on Latin America published this week by Greensill explains that across the region, business invoices are issued and passed through the government, creating a digital record of all business activity. It says Chile pioneered that approach, implementing electronic invoicing in 2003, but it has since become mandatory in other countries.

Of the world’s 36 billion e-invoices issued in 2017, the company says nearly half were distributed in Latin America.

From a supply chain finance point of view, another benefit of the region is that its SME markets are generally underserved. The paper says Latin America is home to around 20 million micro, small and medium-sized businesses “whose borrowing needs are today poorly served or unmet by banks”.

It also cites World Bank research showing SMEs across Latin America account for more than 20% of the world’s unbanked market, with entrepreneurs and suppliers throughout the region struggling to obtain working capital finance.

Both Omni and Greensill report a surge in demand for working capital solutions in 2020 – an ongoing trend that has previously been attributed to pressure on supply chains caused by the Covid-19 pandemic.

Greensill says volumes increased by 73% year-on-year in the first quarter of 2020, while Omni reports a “huge spike in SME applications for credit in March as the spread of coronavirus accelerated”.

At the same time, lending from mainstream financial institutions has become stretched. Caicedo reports a 40% month-on-month fall in capital being obtained by SMEs in Chile, with banks “cutting credit because they’re running blind and afraid of what’s to come”.

That appears to have widened the opportunity for new providers of supply chain finance – though Greensill says that was not a driving force behind the acquisition of Omni.

“We reached commercial agreement around this transaction in the early part of this year, so it definitely pre-dated Covid,” Lex Greensill says.

“It wasn’t an opportunistic thing driven by Covid. Covid merely reinforces the utility of the acquisition and the importance of the solutions that we provide in the region.”