GTR Ventures is a new investment firm formed in partnership with GTR, investing in the equity of trade technology companies and underlying trade finance debt. Here, Kelvin Tan, CIO of GTR Ventures, discusses the global opportunities in trade investment and how he hopes GTR Ventures will create value.
What does GTR Ventures bring to the table that’s different?
Tan: We saw an opportunity to leverage GTR’s unique and huge global trade finance intelligence hub to bridge the gap between capital, technology and investment. As a global funnel for origination, information and distribution, GTR Ventures addresses two big challenges for investors and bankers: we can find good deals and are also able to sustain a pipeline of good deals to match optimal capital deployment.
Tan: The global trade game is changing for all stakeholders and at a pace faster than we in the trade world ever anticipated. We see the governments, corporates, banks, insurers and investors we deal with globally coming to terms with disruption in an industry that has not meaningfully changed for decades. The unified system built around established rules and relationships is giving way to decentralisation, digitalisation and derisking; technology solutions are blooming, new sources of capital are emerging and trade corridors opening.
There’s a huge amount of innovation in this environment and opportunities for those playing it smart. Since our debut, we’ve set a blistering pace when it comes to engaging innovative companies in the trade sector. We’ve taken strategic stakes in some of them and are forming new partnerships and alliances.
How are you approaching your goal to bridge the gap between capital, technology and investments in trade? Where are you seeing opportunities?
Tan: We have been actively tracking non-bank trade lenders and platforms and shortlisting the ones who have sound credit assessment processes, good governance and potential to scale through the astute use of technology. In particular, digital lenders from markets such as the UK, France, China, Hong Kong and Singapore present interesting opportunities for investors and banking capital to access attractive returns from SME trade lending.
Post Brexit, we expect UK firms and entrepreneurs – as well as the government – will look to Asia’s fastest growing economies. After the 9th UK-China summit in December last year, the two countries announced plans for a UK-China US$1bn private equity fund, focused on connectivity deals under the Belt and Road Initiative.
What broader trends do you think are important in global trade?
Tan: We’ve thought a lot about this as we curate deals for our stakeholders in the global banking and investment community. We have five core beliefs about the future that guide our actions today.
First, the future of trade is digital, automated, backed by analytics and increasingly real time.
Second, technology and innovation can liberate liquidity within supply chains, lower credit risk for suppliers and improve global financial inclusion.
Third, bank lending is here to stay, while non-bank lending will play an increasingly large role – we see that with shipping lines and e-commerce now providing trade finance loans. Beyond equity capital, trade finance startups need debt capital to grow. This is particularly pertinent for digital non-bank lenders as they grow their loan books and diversify their base of borrowers, particularly to SMEs.
Fourth, private debt, comprising trade finance loans, will rise as an alternative asset class for investors looking for stable returns, portfolio optimisation and low volatility akin to investment grade bonds.
Finally, blockchain has potential multiple use-cases for trade, and can be disruptive; however, it should not be the starting point and raison d’être for any trade product offering, but as an enabler.
Kelvin Tan is the CIO of GTR Ventures following a career spent at IFC, Singapore’s ministry of trade and the Monetary Authority of Singapore (MAS). Visit www.gtrventures.vc