Digital trade finance provider Modifi has acquired PrimaDollar’s SME-focused export finance business, as PrimaDollar looks to focus more on larger customers of its supply chain trade finance product.
In a joint announcement today, Berlin-headquartered Modifi says it has snapped up PrimaDollar’s client portfolio for export finance, with the London-based fintech completing any outstanding trade finance transactions over the next few weeks.
PrimaDollar says it took the decision to exit export trade finance after the hugely promising uptake of its separate supply chain trade finance product, which is targeted towards medium-sized and large buyers.
“With the increasing success of this platform and focus on larger clients, PrimaDollar’s board has determined that its existing export customers, who are typically SMEs, will be better served by moving across to one of the dedicated export trade finance specialists operating with a similar geographic footprint,” the joint announcement says.
PrimaDollar chief executive Tim Nicolle tells GTR that the two products’ respective customer bases are “completely different communities”.
Supply chain trade finance, he adds, is “already landing major clients and is proving to be a very exciting new opportunity”.
“We’ve got the evidence now, the customer traction, so we can see this is going to work and it’s going to scale fast,” Nicolle says. “That’s what’s driven the decision here.”
For Modifi, which provides a digital platform supporting rapid access to finance for both importers and exporters, the deal provides an opportunity to enlarge its client base in jurisdictions where PrimaDollar specialises.
“For certain markets, we believe it will have a significant impact if we transfer a good proportion of those customers to the platform,” says co-founder and chief executive Nelson Holzner.
“In India, for example, we have a good combination now of our client base and PrimaDollar’s client base, and so could at least double our business there,” he tells GTR.
Another reason PrimaDollar has decided to move away from export finance is because market conditions for credit are expected to become “more challenging through 2021”, Nicolle explains.
Modifi’s Holzner, however, says difficult market conditions “can also mean demand is up” for specialist providers.
“Higher quality importers and exporters are having a harder time accessing liquidity from their traditional funding bases, so you can actually get access to customers who might not have come to you in an environment where they have simple access to local bank funding,” he says.
Holzner adds that the core of the client portfolio acquired from PrimaDollar is “healthy”, adding that “if buyers are not performing well, we can filter that out”.
“Essentially, we have de-risked our growth roadmap, and funding is actually better than ever if you keep your book clean,” he says.
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