Singapore hedge fund targets billions for trade finance

[SINGAPORE] A Singapore hedge fund that's posted steady gains by financing commodity trades in everything from rice to cashews, is working with a global business group to help finance billions of dollars in transactions for small firms.

TradeFlow Capital Management has reached an agreement with the International Chamber of Commerce in France to start a new fund for small companies carrying out physical commodity trades, according to a statement.

TradeFlow, which has reached a preliminary agreement to be sold to Supply@ME Capital, has posted returns of about 0.5 per cent a month since it was formed in 2018, avoiding the turmoil that has buffeted commodity markets during the pandemic. The fund returned 5.9 per cent last year and 6 per cent in 2019.

The Paris-based International Chamber of Commerce represents 45 million companies in 100 countries around the world and will help spearhead the funding drive with its members.

The chamber also reached an agreement with fintech firm Finastra to develop a marketplace to ease access to trade finance for small businesses, according to a statement.

The US$42 million fund's typical transaction size is as low as US$200,000, yet it sees a funding gap of US$1.5 trillion for small firms in the sector. TradeFlow financed more than 300 transactions last year, according to a December update.

BLOOMBERG