30 Jun-01 Jul, 2015 - Singapore, SINGAPORE
Novotel Singapore Clarke Quay
Novotel Singapore Clarke Quay
Recent market analyses indicate that some of the banks have shrunk their commodity trade finance portfolio in view of cranking up of capitalisation requirements by regulators, thus squeezing the margins on offer.
Meanwhile it is also witnessed that certain investors are resigning from asset class completely, especially those who have repeatedly lost money in commodities. Some of these investors are also eyeing different forms of exposure with lower volatility.
In view of such trends, hedge fund company Scipion Capital is offering an alternative - a commodity trade finance fund that delivers decent steady returns. The fund aims at attracting institutional investors who are dissatisfied with poor performance of commodity funds.
Scipion is taking its African Opportunities Fund to the broader institutional investor market. Scipion is eyeing sticky money, some of its existing investors are family offices and wealthy individuals. The credit fund offers short-term, secured loans that cover the transport of commodities from the African interior to the port, or vice versa. Most of the loans offered earn a return of about 8 to 18 percent per annum, but a lot depends on the collateral managers on field.
Risk factor is also another area that helps the fund earn money. For instance it covers areas that banks can't or won't lend against, such as funding gasoline or diesel shipments from an oil major's refinery in Europe to Ghana.
Some of the attractive commodities that are lucrative for investments include imports of cement or bitumen, or exports of cocoa, coffee and cotton - which are high consumption commodities.
More on commodity trade finance will be discussed at Asia STCF (Structured Trade & Commodity Finance) 2015 on 30 Jun-01 Jul, 2015 in Singapore.
Contact Ms. Grace Oh at grace@cmtsp.com.sg or call +65 6346 9147 for more details.
