Groupama Asset Management Sgr, the Italian branch of the French parent company active in investment management, has launched the Supply Chain Fund in our country, the first alternative investment fund - FIA specialized in the purchase of commercial credits directly from SMEs, reserved for professional investors.
The Supply Chain Fund, which has already received the go-ahead from the Bank of Italy, is the first authorized and operational credit fund in Italy and remains the only one of its kind even at European level.
The Fund uses the sums collected from Italian institutional investors to advance the payment of invoices to supplier SMEs upon acceptance of the goods and recognition of the invoices by the large client company. The large company will settle the invoices directly to the Fund's accounts by maturity and will thus have ensured the financial stability of its entire strategic supply chain.
Investors who subscribe to units of the Fund will have the opportunity to use their assets to support the country's productive fabric and the real economy, through a new asset class – trade credits – unrelated to the performance of the financial markets. The duration of the Fund is 5 years.
The initial capital available to the Fund, amounting to 50 million euros, is equivalent to an overall potential financing capacity of approximately 200 million euros on an annual basis in favor of SMEs, in consideration of the fact that the initial amount, linked to a average invoice maturity of around 90 days, will be reinvested on average four times over the course of a year.
The Supply Chain Fund makes use of a proprietary digital platform among the most advanced on the market, developed by FIFTY Finance Beyond, a company born from the partnership of Groupama AM Sgr with TESI Spa - a leading company in Italy in digital collaboration solutions for the supply chain, to monitor real-time reports relating to all phases of the supply process and manage the credit financing process.
The platform, which will be able to monitor all front and back office processes in real time - delivery, goods control, issue invoices, manage advance payments and reconcile collections, will allow the Fund to acquire and analyze a number of qualitative information relating to the specific supply relationship which is not currently used by the traditional banking system, reducing the risks associated with investing in trade receivables and containing the cost of financing for businesses, without burdening existing operating processes along the supply chain or the need to make investments in technology by the companies involved.
After assigning a rating to each counterparty in the supply chain, combining the creditworthiness of the large client company, usually better, with qualitative elements inherent in the supply relationship, the Fund will enter into a trilateral agreement (reverse factoring) with the SME via the digital platform and the large company and in agreement with the latter will define the economic terms and conditions to be applied to suppliers, guaranteeing them access to credit at more favorable conditions.
