Enterprise software company SAP is joining the ever-expanding supply chain finance (SCF) industry, after it agreed to buy a majority stake in working capital solutions provider Taulia.

Founded in 2009, Taulia offers early payment through SCF, dynamic discounting, inventory and accounts receivable finance. Financial details of the transaction were not disclosed, but following a major funding round that was completed in July 2020, which saw Taulia raise US$60mn from backers including JP Morgan, Ping An and Saudi Aramco, the Wall Street Journal pegged the company’s valuation at around US$400mn.

Once the deal is complete, Taulia will operate as an independent company with its own brand in the SAP group, with Cédric Bru staying on as chief executive. SAP chief financial officer Luka Mucic will become chairman of Taulia’s board.

SAP says that Taulia has been an “important partner” with proven integration into SAP solutions, adding that more than 80% of Taulia’s customer base, including companies such as Airbus, Nissan and AstraZeneca, run an SAP enterprise resource planning system.

Although SAP will now integrate Taulia’s system into its offering, Taulia’s solutions will remain available on a standalone basis so that non-SAP customers can continue to use the platform.

The popularity of SCF and other working capital tools has skyrocketed in recent months as Covid-19 related disruptions placed significant liquidity pressure on smaller suppliers and distributors. “Challenging economic conditions and disruptions in supply chains have significantly increased demand for early payment and the market for working capital management has seen strong growth,” Taulia says in a statement.

The fintech company’s latest financial results, published in September last year, showed that revenue from its supply chain finance solution grew by 42% year over year. Research published by Taulia earlier this month also revealed that the number of suppliers taking early payment after invoice approval has doubled over the past five years.

While the SCF industry has thus far been dominated by banks and fintech companies, recent months have also seen big tech firms including Facebook and Amazon enter the fray.

SAP’s acquisition of Taulia marks the latest move into the space by a company from an adjacent industry. In October last year, payments giant Mastercard linked up with Taulia competitor Demica to embed SCF into its offering, which it says will increase access to working capital while lowering costs, reducing complexity and risk and accelerating automation.

“Taulia strengthens our portfolio and adds value to a point that is key to every company: financial flexibility and stability. With that, they contribute to making supply chains more resilient,” says SAP’s Mucic. “By combining the deep working capital management expertise of Taulia with SAP’s broad CFO solution portfolio and the integration into our core business software and business network solutions, we are well positioned to become a leader in working capital management. We will offer these capabilities at scale to help businesses improve their financial position and seize growth opportunities.”

Taulia’s strategic partnership with JP Morgan remains unchanged by the acquisition, and the bank says it will continue to maintain its equity stake in the fintech.

“This news is very exciting for both Taulia, our successful strategic alliance partner, and SAP as the new majority owner,” says Stuart Roberts, global head of trade and working capital at JP Morgan. “With SAP, we expect the strategic alliance between JP Morgan and Taulia will unlock new opportunities for us to serve our clients, and to inject and redeploy liquidity to suppliers as the world continues to manage impacts from the pandemic on the global supply chain.”

SAP says it will invite additional financial institutions to run their clients’ working capital management business on the platform, and also intends to invite further “strategic banking partners” to become equity partners in Taulia.