B UILDING F ACTORING B USINESS P LATFORM P RESENTED B Y B LEND F INANCIAL S ERVICES L IMITED AT W ORKSHOP ON “ A CHIEVING SUCCESS THROUGH F ACTORING ” O RGANIZED B Y A FRICAN E XPORT – I MPORT B ANK (AFREXIMBANK) ON 2 ND , D ECEMBER , 2011 A T ACCRA, GHANA
AGENDA 1 B LEND : A N O VERVIEW F ACTORING : I NDIA E XPERIENCE 2 F ACTORING : A FRICA O VERVIEW 3 B LEND : O FFERING 4 Private & Confidential
B LEND F INANCIAL S ERVICES L IMITED A N O VERVIEW
B LEND O VERVIEW Global Market People Customer Relationship Position presence Strong Management India based fast Pan India team, 130 growing network with strong Strong clientele Strong banking Corporate International professionals globally with and corporate Advisory presence in supported by cumulative network in India company Dubai, Hong team of experts mandates of and offering wide Kong, Sri Lanka, in Banking, USD 2.42 billion Internationally range of USA and UK Factoring & financial services Financial services 4 Private & Confidential
B LEND : B USINESS M ODEL Mergers & Acquisitions/LBO Promoter funding/ Foreign Subsidiary funding GROWTH FCCB/Private Placement Expert Advisory in Factoring Initial Public Offer Debt Syndication Investment Banking Private Equity Working Capital & Mezzanine Capital Allied services/advisory in Banking & Structured Products Venture Capital Financial Services Debt Syndication Angel Funding MANAGEMENT CONSULTANCY SERVICES Seed Startup Growth Expansion Established Exit 5 MSME focused financial advisory company poised to offer 360 degree financial solutions . Private & Confidential
J OINT V ENTURE – F ACTORING India Factoring and Finance Solutions Pvt. Ltd (IFFSPL) Punjab National Bank IFFSPL FIM Bank Facilitating trade through factoring and related financial Banca IFIS services in trade Finance. Blend Financial Services Limited Blend has catalyzed the globalization of factoring services in India by bringing PNB, 6 FIM BANK and BANCA IFIS together to facilitate trade promotion through factoring Private & Confidential
J OINT V ENTURE – R OLES FIM Bank- Credit institution having specialization in Punjab National Bank- 2 nd largest Public Sector Bank in India International trade finance & Factoring. with Business of USD 113616 million. • Focused on developing Markets and to expand its • Foray into new business. foot print in India. • Acts as Strategic Investor. Gives its Brand to the JV • To provide technical support and assistance to the company. company. • To Provide line of credits. India Factoring and Finance Solutions Private Limited (IFFSPL) Blend Financial Services: A leading financial services Banca IFIS (Strategic Partner)- Italy based bank having company with expertise in Factoring and allied activities expertise in factoring and trade finance business • Brings Global expertise of factoring business. • Marketing partner. • Brings new factoring and leasing products. • New product development. 7 Private & Confidential
C ERTIFICATES & A SSOCIATIONS Blend Certified with Quality Management System Member of Member of International International MOC with Network of SMEs Factors Group Afreximbank “IFG is the first “Extending “Signifying its international support to the SME linkage with Global association of Sector in the SME support factoring companies. ” continent of Africa. organizations” IFG helps factoring Blend and The network companies to conduct Afreximbank comprises at cross-border business agree to cooperate present 80 Blend is among the acting as in developing and members based in few Financial correspondents for promoting trade 32 countries in 5 Services Company to each other services between continents avail ISO 9001:2008 8 Certification. India and Africa” Private & Confidential
F ACTORING : B LEND ’ S E XPERTISE In factoring business for past 12 years; in depth understanding of all challenges of the business & product Resource SME centric management organization and Understanding – ability to understands SME of SME assist raising funding requirement funds through and issue innovative structures Expert team with complete knowledge Technical of factoring business/ Knowhow & Knowledge product and business product of capability processes. challenges of product Instrumental in setting and With the experience and expertise gained in up India Factoring, in business Proven Track India and with the intermediation of relevant 12 months time has and its record factoring turnover of institutions, Blend can play a pivotal role in mitigate approx USD 250 developing factoring product in Africa million with zero NPA 9 Wide structuring ability for each transaction. Have developed unique industry specific product. Private & Confidential
F ACTORING I NDIA E XPERIENCE
F ACTORING – I NDIA S CENARIO India - 2010-11 Number of Factoring companies: 11 Domestic Factoring Turnover (in Millions of EUR): 2,600.00 International Factoring Turnover (in Millions of EUR): 150.00 Total Factoring Turnover (in Millions of EUR): 2,750.00 Source – Factor Chain International Started in 1991 with SBI factors Grew by over 800% from 1998 to 2003 Between 2003 to 2006 grew by 120% Slowdown had a large effect on the product and turnover became half vis-à-vis 2008 in 2009 85% of the market share of SBI Global Factors Turnover Growth from 2009 mere 4% in 2010 11 Private & Confidential
F ACTORING – I NDIA S CENARIO Till date limited nos. of players engaged in factoring Factoring Volume - India activity. 6000 In 2010, factoring turnover reached Euro 2750 Million € million, which constitutes roughly 0.40% of India’s 5200 5055 GDP. Factoring turnover in India is approx. 0.048% of 5000 the total Bank credit. 4000 Factoring turnover in India is mere 0.17% of the World Factoring turnover and 0.77% of total Asia 3560 turnover. 3000 2750 2650 Products offered by factoring companies constitutes Domestics, International, disclosed, undisclosed. 2000 1990 Currently facility offered are with recourse factoring 1625 due to ban on credit insurance. 1000 International Factoring still to gain momentum and factoring volume constitutes 95% of domestic factoring. 0 2004 2005 2006 2007 2008 2009 2010 Majority of the factoring business in India is controlled by top 3-4 major players. 12 Source: Reserve Bank database/Factor Chain International Private & Confidential
F ACTORING – I NDIA S CENARIO C HALLENGES Absence of Regulatory framework. High stamp duty on factoring transaction. Mitigated once Regulation of Factor (Assignment of Receivables) Bill, 2011 is Lack of supportive legal framework – uneven enforced playing ground with Banking system. Competition from Commercial Bank. Improved since establishment of CIBIL; Reserve Bank of India has already given Access to information on credit worthiness. approval to 3 new players Challenges are similar in African Market & the story can be build taking cue from Indian experience 13 Private & Confidential
F ACTORING – I NDIA S CENARIO F ACTORING B ILL For any factoring business to grow, there has to have robust legal and regulatory framework. With the advent of “The Regulation of Factor (Assignment of Receivables) Bill, 2011 ” , the same will get addressed giving way to development of Factoring in India and allowing International Factors to set up shops. What we are going to achieve with “ The Regulation of Factor (Assignment of Receivables) Bill, 2011 ” Registration of NBFCs as a Factor with Reserve Bank of India (RBI) and RBI to regulate the Factoring Companies. Clarity on the Rights and Obligations of parties to the contract for Assignment of Receivables and setup of Central Registry for registration of assignments. Linkage with MSME Act, 2006 which will give better market coverage to the Factor. Central Registry to be set up under section 20 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to give right to the Factor(Assignee) on specific Assignment. Amendment in Civil Procedure Code, 1908 to extend the law relating to recovery of Debt to dues under a Factoring Arrangement. Amendment in The Credit Information Companies (Regulation ) Act, 2005, bringing disclosure with regards to recovery of Assigned Receivables. 13 Private & Confidential
F ACTORING – E MERGING B USINESS O PPORTUNITY Trade finance to drive the global economies for years to come. Emerging economies will consolidate their position as the ultimate provider of commodities, food and fuel to the rest of the world. Emerging economies are enhancing their political – economic influence in the world. International trade is shifting towards open account terms – supply chain financing and innovative trade finance to replace L/Cs. Factoring critical for trade finance – global economy. SMEs in emerging markets are important for driving global economy. Factoring becoming a mainstream product and getting wide acceptability. Liquidity crunch and factoring (boutique of services). Rewarding for – all stakeholder, i.e. institutions, investors, the product and economy. 15 Private & Confidential
F ACTORING – B ENEFITS TO SME 16 Source: A Study on Factoring by SIDBI Private & Confidential
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