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Singapore fintech offers one-stop electronic platform for corporate loan market
WHILE equities, foreign exchange and bonds are primarily traded electronically today, the trading of corporate loans have remained largely a manual and relationships-based exercise.
Seeking to enhance the efficiency and liquidity of this market – which has traditionally thrived on roadshows, voice calls and Rolodexes – Singapore-based fintech iLex is creating a digital platform that allows end-to-end automation for loan syndication and trade execution.
iLex founder and chief executive officer Bertrand Billon announced on Thursday that his startup has attained seed funding with strategic and fintech investors from France, Hong Kong, Singapore and the US. The amount is in a “couple of million” of US dollars.
Currently, six global corporate and investment banks have indicated their interest to come on board the platform, which will launch in October. Mr Billon declined to reveal the identities of the investors and prospective partners.
With increased regulatory pressure, capital constraints and direct competition from non-bank lenders, commercial banks are gradually shifting their approach for trading corporate loans from relationship banking to a capital markets model – this represents an opportunity to digitise the corporate loan market, Mr Billon said.
“As evidenced by the electronification of other asset classes such as equities, foreign exchange or bonds, significant benefits can be derived from an electronic market, including the lowering of costs and operational risks and improving liquidity and price discovery for the loan market,” he said in a briefing on Thursday.
While such platforms have been coming up globally, many tend to focus on niche or specialised markets, such as the US’s mid-market companies, or Schuldschein loans in Germany (the equivalent of a private placement that shares many characteristics of a loan).
iLex is casting a wider net. The platform is seeking to cater to both primary and secondary markets for corporate loans, and is targeting banks, hedge funds, pension funds, sovereign wealth funds, life insurers, among others.
The startup has also signed a memorandum of understanding with IHS Markit, and hopes to connect its platform to the London-based global information provider’s suite of solutions to facilitate multi-bookrunner syndications, settlements and analytics.
By aggregating data from industry data partners, it hopes to provide users with insights into market activities by borrowers and lenders, as well as pricing and credit benchmarking tools.
Mr Billon noted that banks, while contributing to over 95 per cent of corporate lending in the Asia-Pacific, have not been fully maximising their loan distribution to connect with smaller prospective buyers. The market remains fragmented, he said.
“The buy-side, which has been driving the growth in appetite for private debt, faces restrictions in sourcing for loan assets due to limited resources and market complexity. iLex’s platform will help to address those pain points,” he said.