Maritime technology company Pole Star believes the industry is “on the cusp of a boom” in the use of advanced technology in trade, as it eyes expansion following an injection of funding from private equity investors.
London-headquartered Pole Star, which tracks and analyses vessels’ behavioural data, announced in April that Wavecrest Growth Partners and Abry Partners had completed a “significant growth investment in the company”.
The funding will be used to accelerate hiring and expand product development in the face of rising industry demand for technology, particularly around trade and commodity finance, maritime surveillance and sustainability solutions, the company says.
Wavecrest, which focuses on growth investment for established technology companies, says there are multiple opportunities for cloud software in maritime trade, including in compliance, surveillance and payments.
“The maritime industry is the critical conduit for US$20tn of annual global trade, and it is an exciting time in the industry,” says managing partner Deepak Sindwani.
Though Wavecrest and Abry now hold a majority stake in the company, details of the value of the transaction have not been disclosed.
For Julian Longson, chief executive of Pole Star, the decision to take on board growth equity investment was taken in response to soaring demand for technology-driven trade processes.
“We know we have to invest in technology, to move towards high-performance computing and automation, and to make sure that’s scalable,” he tells GTR. “That needs investment, help and support, which we now have access to.”
One reason the maritime trade sector has increasingly turned to technology-driven processes is to ensure compliance with ever tougher sanctions controls – particularly following a landmark advisory from the US Office of Foreign Assets Control (OFAC), which contained sector-specific guidance straying well beyond the regulated financial sector.
“The OFAC advisory was a major tipping point in terms of sanctions compliance, highlighting that shipping is ultimately the key artery for illicit trade,” Longson says. “Beyond banking, finance and commodity trading, I think that surprised a lot of the maritime sector because of how extensive it was.
“It brought the whole supply chain into the mix, shifting the onus of sanctions compliance from primarily financial institutions, to shipping companies, flag administrators, freight forwarders, insurers and others associated in the maritime trade supply chain.”
At the same time, Longson says traders and trade finance institutions are increasingly turning to technology to improve ESG standards, with Pole Star partnering with CarbonChain, a carbon accounting solutions provider, to integrate vessel emissions data into its PurpleTRAC service.
“If the carbon rating or polluter status of a ship can be tracked and compared to its peer group, the institution concerned can potentially be a few basis points better off in terms of working capital and finance packages they receive from the banks,” he says.
“These are complex processes we’re trying to automate all at once. To support that, it is of critical importance to have an investment pool to help us grow organically and, if necessary, by acquisition.”
The investment will result in Wavecrest growth partner Colin Doherty joining Pole Star’s board of directors, along with Oni Chukwu, most recently executive chair and CEO of event management firm Aventri Software.