By David Gustin, on Spend Matters
I recently had an opportunity to catch up with Chris Hale from Kountable. Kountable is doing some real trade finance, providing pre-shipment finance to resellers in Africa.
That is a high value-added function to many of the large manufacturers who know their emerging market resellers are starved for access to capital.
Kountable has come up with a solution to facilitate the trade, but not in the normal way of providing capital to a reseller in the middle of a buy-sell trade, but by using a cloud-based technology infrastructure, and leveraging operational capabilities in a Cayman entity that takes control of good Freight on Board and sells them CIF to generate offshore revenue.
It’s not for the faint of heart, but one of the founders, Craig Allen, has been doing this for a number of years with banks and others in the Middle East and Latam.
Kountable uses a mobile device to do 3 major things:
- Manage Identity – is the reseller who they say they are without using significant manpower to check this out. If you got a reseller who has won a contract to supply a hospital or school, Kountble uses data off the device. They map any data they can get from their contact lists and social media connections and digital footprint into a large digital profile. They combine the digitial footprint with Thomson Reuters World Check engine to qualify counterparties.
- Submit proposal – if the reseller has a contract with a teaching hospital that is being built by Chinese Development Construction company (CJIC) in Nairobi, they will submit documentation to allow Kountable to manage validating that documentation.
- Deal Approval and Funding – Once contract and purchase order is confirmed, it can be funded. When funded, the reseller pledges the contract and Kountable collects direct from CJIC, and pays suppliers direct. The asset is owned in the Caymans trading entity. Kountable has in country servicing entities for bank account purposes and FX purposes.
In January, Kountable closed a $150M Line of credit and every 30 days they post these trade assets and draw down LOC. With a $150M line, Kountable can scale to $400M to $600M in trades.
Kountable has a number of ways to find resellers in these markets. First is just referrals from banks. Second, is the large manufacturers like Cisco and Philips who refer resellers to Kountable. Their dealer network just cannot get enough local finance. They will issue a PO to their resellers who just cannot find traditional finance with banks.
It’s a very interesting model, and one that helps these emerging market resellers source medical equipment, computers, etc. to much needed projects.