Gunvor Group and GE Capital have agreed a €225mn receivables financing programme that will finance part of the commodity giant’s oil refinery in Germany.

Only a handful of commodity houses have established a factoring programme and this transaction marks the largest single receivable finance programme in Germany.

According to a statement issued by Gunvor, the deal is part of the company’s broader strategy to diversify its financing base while reducing liquidity risk throughout its businesses.

“By freeing up trade finance lines we are creating more liquidity and more opportunity. So instead of just getting a bigger gas tank, factoring makes our financing engine more efficient,” says Gunvor’s chief financial officer Jerome Schurink.

The trading house listed the benefits of factoring in its release, noting specifically the favourable speed (quicker than securitisation) and cost (based on the receivable rather than the seller) of the financing tool.

Gunvor’s German refining portfolio has annual sales in excess of €4bn, which necessitates a strong banking partner.

GE Capital Germany chief commercial officer Jorg Diewald comments: “Gunvor’s growth over the years has been driven by the innovative approaches its financing team has taken to support the company’s trading and logistics expertise. GE Capital looks forward to a successful cooperation with Gunvor which might even lead to other projects beyond financing-building on both companies’ footprint in the oil and gas industry.”