Netfin Acquisition Corp., a special purpose acquisition company targeting businesses in the fintech industry, and Triterras Fintech Pte Ltd., a leading fintech company for commodity trading and trade finance, have entered into a definitive agreement for Triterras Fintech to become a publicly listed company (the “Business Combination Agreement”). Upon closing of the transaction, a newly formed Cayman holding company to be named “Triterras” will acquire Triterras Fintech and Netfin and register its shares for listing on the Nasdaq Stock Market under a new ticker symbol.
Following Netfin’s announcement of a non-binding letter of intent to combine with Triterras Fintech and its affiliate, Triterras Holdings Pte. Ltd. on June 29, 2020, the parties made the strategic decision for Netfin to combine solely with Triterras Fintech and not with its affiliated Rhodium commodity trading business in order to create a standalone, fast-growing fintech pure-play business with a 100% fee-based platform and no balance sheet exposure.
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Founded in 2018, Triterras Fintech is a leading fintech company focused on trade and trade finance. Its proprietary Kratos™ digital marketplace is one of the world’s largest commodity trading and trade finance platforms that connects and enables commodity traders to trade and source capital from lenders directly online. Triterras Fintech monetizes the Kratos platform by charging fees to its users on their trading and financing transaction volumes. It maintains a presence in key trading centers across the world, including Singapore, the U.K. and the U.S.
Netfin and Triterras Fintech believe Kratos is the only non-petroleum commodity trade and trade finance platform of scale and a first mover in solving critical industry challenges. Kratos solves many of these challenges and directly addresses the $1.5 trillion annual trade finance shortfall reported by the WTO by linking lenders and traders, and allowing them to transact directly on the platform in a significantly more cost-effective, secure and faster way. Sourcing trade finance is identified as the largest issue for many commodity traders.
In fiscal year 2019, Triterras Fintech generated $3.6 billion of transaction volume, $16.9 million of revenue, $14.8 million of EBITDA and $13.2 million of net income. The company projects to generate approximately $7.8 billion of transaction volume, $56.6 million of revenue and $39.8 million of EBITDA for fiscal year 2020 (12 months ending February 28, 2021) and grow at more than a 60% compound annual growth rate (“CAGR”) through 2023.
Trade finance is a $40 trillion industry that provides funding for global trade. Kratos has rapidly become a trusted platform enabling buyers and sellers to trade commodities as well as facilitate short-term trade finance. For traders, the trade financing is critically important to fund physical commodity purchases while in transit and prior to delivery. Kratos provides significant benefits to traders including access to trade finance, lower financing costs, faster cycle times, fraud prevention, improved discovery, and higher quality analytics and reporting. Equally impactful to lenders, Kratos reduces administration costs, abates risk and fraud, and provides access to prequalified and packaged borrowers with anti-money laundering and “know your customer” solutions.
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“Our business combination with Triterras Fintech creates a leading pure-play fintech company that is digitizing a large and growing industry, while making transactions more cost-efficient, secure and faster,” said Marat Rosenberg, President and Director of Netfin. “This is a high-margin, fast-growing platform business with scale. As a public company with access to capital markets to fund its growth, we believe Triterras Fintech will deliver strong near and long-term value for Netfin shareholders. We look forward to supporting Triterras Fintech’s leadership through their new growth phase as a public company.”
Triterras Fintech Founder, Chairman and CEO Srinivas Koneru added: “Triterras Fintech’s tech-enabled platform combined with our deep industry experience provides us a first-mover advantage in disrupting the physical trade and trade finance industry. COVID-19 has rapidly accelerated the migration of trade as well as trade finance to our online platform, Kratos, which has experienced a significant increase in customer activity and transaction volumes since the onset of this pandemic. The experience and capital that Netfin adds will enable us to accelerate our growth and more effectively capitalize on our pipeline and broader market opportunity.”