LCV Trade Finance Fund on track with an additional US$14.8mil to support SMEs in Singapore

• Reopening follows a previous US$14.8 million close in March 2019
• The fund generated an annualised returns of 6.38 per cent for the SGD share class

SINGAPORE-based  leading SME lending platform Validus Capital (Validus) and Lighthouse Canton, an independent asset management and family office advisory services firm, jointly announce the reopening of the LCV Trade Finance Fund (the Fund) with additional capacity of US$14.8 million (S$20 million; RM60 million).

This is part of both companies’ efforts to provide business financing to small and medium sized businesses, particularly in the manufacturing, construction and marine sectors who face a financing gap.

Existing Lighthouse Canton clients will be given priority to invest in the fund ahead of June 2019, when it will be open to new investors.

“We are delighted to continue to build on our partnership with Lighthouse Canton. By leveraging on our expertise in SME lending and using data and technology to drive more informed and responsible lending decisions, we hope to accelerate financial inclusion and transform SME lending in Southeast Asia,” said Validus co-founder and chief operating officer Nikhilesh Goel (pic, right).

“Buoyed by a very successful first year together, and with growing SME demand for credit through Validus’ platform, we remain confident that the fund could scale up to US$148 million (S$200 million; RM602 million) in the next few years as we continue to accelerate our efforts in closing the SME financing gap,” added Goel.

“Many investors are looking at ways to diversify their investment portfolio, capitalising on Singapore’s and Asia’s strong economic growth. Since the launch of the Fund, we have observed a steady rate of return.

“This reinforces the investment merits of supply chain-focused trade finance funds as they provide high liquidity, good premiums over cash and a predictable risk profile for fixed income investors,” said Lighthouse Canton director Sanket Sinha.

He added, “We are impressed by Validus’ proven track record and the wealth of expertise possessed by its leadership team. This partnership has offered a new asset class for our investors, enabling them to invest on Singapore’s largest P2P lending platform. As part of our commitment to delivering positive returns for our investors, we will continue to take a measured and phased approach to scaling up the fund.”

The fund was launched in June 2018 and raised US$14.8 million (S$20 million; RM60 million) before its soft-close on March 1, 2019.

Its strategy is to invest in trade finance facilities for Singaporean SMEs who are suppliers of government-linked companies (GLCs) and large corporations. The Fund’s target investors are accredited UHNWIs, family offices and institutions.

In just nine months from launch, the initial capital raised was fully redeployed to Singaporean SMEs across a diversified spectrum of sectors, with the largest exposure being in the construction, manufacturing and marine industries.

The fund posted annualised net investment returns of 6.38% and 7.53% for the SGD share class and USD hedged share class respectively as of end-February 2019.

Eight in ten SMEs in Singapore do not qualify for traditional financing, resulting in almost S$20 billion of unmet financing needs. Validus has been making inroads to closing the gap and the fund provides another source of financing for these SMEs.

Overall, over 300,000 Singaporeans were directly or indirectly impacted positively by the Validus platform and their forecasted growth numbers indicate a direct impact to the country’s gross domestic product.

Validus recently raised US$15.2 million (S$20.5 million) in an oversubscribed Series B funding round in February 2019. It was led by Dutch public-private development bank FMO, which is 51% owned by the Dutch government and invests in private sector growth in emerging markets.

Currently, Validus is going through the application process to start operations in Indonesia and also intending to expand its operations into Vietnam later this year.