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Tag: shard credit partners

Understanding Trade Finance & Its Impact on Global Markets

Posted on by abigailscott

Chris Ash, Head of Trade Finance at Shard Credit Partners joins Bill Blain, Market Strategist for Shard Capital on this week’s edition of the Shard Capital Podcast to discuss the recent disruption in the Red Sea, and the impact it is having on global trade routes.

The duo evaluate how various factors influence consumer prices and trade finance investments, providing insight into the resilience and adaptability of global shipping markets, and the specific returns generated by trade finance funds.

 

Listen in on the conversation below 👇🏼

 

Recorded 14th March 2024

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Trade Finance, an asset class to help you navigate today’s choppy seas

Posted on by abigailscott
Container Ship passing through the Suez Canal 

 

Approximately 12% of global trade , valued at over $1 trillion, passes through the Suez Canal. In the case of Europe/Asia specific trades, this figure rises to 40%. The canal has long been a vital artery for world trade, saving significant time and distance, particularly for goods traveling between East Asia and Western Europe. According to Egypt’s Suez Canal Authority (“SCA”), the waterway hosts 50 vessels a day, carrying between $3 to 9 billion worth of cargo combined. 28% of these vessels are large container ships carrying up to 20,000 containers each.

The importance of the Suez Canal was highlighted in 2021 when the Ever Given blocked the canal for six days causing extensive delays for over 400 vessels and necessitating lengthy detours around the Cape for many others. Presently, due to ongoing geopolitical events in the West Bank and retaliatory actions by Yemen’s Houthi rebels, delays of up to four weeks are being experienced, leading to significant increase in container rates for vessels that would typically transit the canal. Shipping lines are compelled to opt for the longer route around the Cape of Good Hope.

Fortunately, the shipping industry’s significant overcapacity following the Covid-19 pandemic has helped alleviate the current situation to some extent. However, prolonged tensions in Gaza could result in potential shortages, particularly for consumer goods reliant on shorter transit times. Whilst the timing of the Chinese New Year has mitigated some impact, a shortage of empty shipping containers, which caused a sharp increase in freight rates during the pandemic, has yet to materialise. Nonetheless, the rapid rise in container rates is likely to exert inflationary pressure on goods prices if the situation persists.

Goods with lower profit margins, dependent on competitive container prices, are particularly susceptible to short term price fluctuations. Despite these challenges, traders have become more resilient in the post-pandemic era. The long-term outlook for shipping is that over-capacity will remain a significant factor through 2024 and 2025 in dictating normalised shipping rates, whilst economies around the world make the slow climb out of recession. ING Research sights 27% of additional capacity coming on stream during this period, whilst scrapping is running at only 6.25% of new vessels. Over-capacity has recently been mitigated by “slow-steaming”, the process of operating a container ship significantly under their maximum speed. However, there is considerable availability nonetheless. The current spike in container rates being experienced is wholly event driven and an extreme dislocation of the base trends. The current increase in rates is wholly disproportionate to the actual economic cost of elongated transit times, and as the Pandemic experience demonstrated, rates crashed down very quickly, falling by as much as 90% from their Covid-19 peak.

At Shard Credit Partners (“SCRP”) Trade Finance, we stand by our clients during these challenging times, offering extended tenors on trades adversely affected by current events. Only a handful of trades were impacted. Our trading lines of credit are designed for flexibility, allowing us and our clients to adapt swiftly to changing circumstances and mitigate risks before shipment. The container rates on our trades are set before SCRP engages in a transaction, so if the economics of the trade do not stack up, the Trade Finance team do not enter into the transaction. Furthermore, we ensure goods are insured for 110% of their value against piracy or loss, and regular interaction with counterparties helps manage risks for all stakeholders involved in the trades we finance.

Through SCRP’s robust and flexible investment approach, we:

  • Generate market leading risk adjusted returns which are not correlated to world events
  • Deliver a diversified and dynamic portfolio of trades across jurisdiction, tenor and sector
  • Offer downside protection by being extremely adaptive to micro and macro-economic factors due to the short tenor and nature of transactions, and the uncommitted nature of the facilities offered
  • Share our deep knowledge and insights on one of the oldest forms of finance

 

Chris Ash Head of Trade Finance comments:

“SCRP’s dynamic Trade Finance Offering is well placed to meet the ever-changing landscape that our clients face. We pride ourselves in being able to support and advise businesses on trading securely, regardless of the challenges which may be encountered. Trade always finds a way despite headwinds, and following the pandemic, is more robust than ever before. The short term nature of trade finance makes the asset class extremely responsive to world events, and offers a very secure investment opportunity when compared to other forms of finance.”

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Shard Credit Partners goes on a Scottish road trip with JST Ports and Logistics Holdings Ltd

Posted on by abigailscott

JST’s floating pier operation at Loch Etive

It is difficult to imagine a more idyllic work location than on the shoreline of Loch Etive in the Scottish Highlands. We are several hours drive from Glasgow, which is 104 miles southwest of here. The land quickly steepens away from the loch and in every direction mountains carved out from the granite complex of Etive rise up to meet the skyline.  Notable peaks include Ben Starav at 1,078 metres above sea level, visible in the photo above.

The area is sparsely inhabited, with the primary economic activities being tourism (hiking, fishing and deer stalking), shellfish harvesting, hydroelectric power generation and commercial forestry management. Timber production from sustainably managed forestry and timber processing is an important industry throughout the Scottish Highlands and Islands, contributing nearly £771 million to Scottish GDP annually. In areas that are sparsely populated and far from urban centres, the Scottish timber industry provides full time employment for 19,555 people (source: Scottish Forestry).

 

Timber transportation and logistics industry, banks of Loch Etive
Timber transportation and logistics industry, banks of Loch Etive

Loch Etive, around twenty miles long, is a sea loch which runs approximately north-east to south-west and bisects a designated ‘wild land area’ of 507 km2, just south of Glencoe.  The area, largely uninhabited, is encircled by A roads (the A82 over Rannoch Moor and the A85 around Loch Awe), but the only vehicular access to the shores of the loch is via the twelve mile long single track Glen Etive road (made famous by the James Bond film ‘Skyfall’).  This makes the high volume transportation of felled roundwood timber from the woodlands to processing centres located around the UK and elsewhere challenging, to say the least.

Loch Etive Woods is a designated special area of conservation spanning 2,643 hectares.  60% of this area is taken up by broad-leaved deciduous woodland comprising of ash, hazel and sessile oak habitats, but 3.5% is coniferous woodland. The Scottish Forestry Commission manage a couple of hundred acres of commercial pine forests bordering the loch, harvesting 30,000 tonnes of roundwood timber per annum.  From here it must be transported tens, or hundreds of miles to processing centres as far afield as Birkenhead, where it can be turned into useful commercial products.

 

A cargo ship being loaded up with roundwood logs from JST’s floating pier at Loch Etive

Such remoteness, combined with restricted vehicular access, pits the needs of the Scottish forestry industry against the needs of local tourism, upon which the local economy also depends.  In order to prevent relentless summer traffic jams, clogging up single track lanes with articulated lorries transporting 25 tons per load of freshly harvested roundwood timber out of the forests and away to timber processing centres such as Fort William, alternative strategies must be seriously considered. JST Services (Scotland) Limited (“JST”), a portfolio investment company of Shard Credit Partners, has been innovating in this industry for several decades, becoming a reliable partner within the Scottish commercial forestry ecosystem.

Given the vast watery expanse of Loch Etive, which being a sea loch is conveniently linked to the open waters of the North Atlantic, transportation via ship provides a welcome alternative to road transportation. However, timber plantations can take several decades to mature, with relatively modest extraction volumes. This means it is uneconomical to construct and maintain a permanent pier or port infrastructure to moor sea vessels onto. To get around this, JST has invented the concept of the floating pier, which is movable, can be transferred from location to location by tug boat, and leaves virtually no impact on the local ecology when removed.  JST operates three floating piers at remote locations throughout the Scottish Highlands.

 

JST’s mobile cranes loading timber from its floating pier operations at Loch Etive

The floating pier (shown in the photo above) consists of a steel bridge, which is connected to the shoreline at one end and is mounted on a recommissioned barge at the other, with a strengthened surface so that it can take the weight of a fully loaded timber lorry and a large crane. The timber is driven over the bridge and onto the floating pier, where it is lifted straight off the lorry and into the hold of a waiting cargo ship. Each ship can accommodate between 900 and 2,500 tonnes of roundwood logs, which takes JST’s skilled crane operators between a half and one full day to load each vessel.

The annual CO2 savings from transporting felled timber by sea, rather than by road, are significant. Each year around 30,000 tonnes of logs are expected to be moved by ship from the floating pier at Glen Etive to saw-mills in northern Scotland and north-west England, where they are turned into FSC-certified timber products for fencing, landscaping, cladding, house construction and furniture.  Some 33 ships per year are expected to be moved from Glen Etive, producing an estimated 233 tonnes of CO2 when the final road miles and log handling equipment is factored in.  If these logs were instead to be transported solely by road, the equivalent CO2 impact would be around three times at around 640 tonnes, generating a net saving of approximately 317 tonnes of CO2 annually and removing around 317,000 HGV road miles – even ignoring the negative impact and cost from HGV’s using unsealed Highland single-track roads and the impact on the tourist economy.

The floating pier operation at Loch Etive is just one example of how JST is bringing innovation to the transportation and logistics sector to facilitate the decarbonisation of the UK forest products industry.  JST operates floating pier operations at two other locations in Scotland – one at Ardcastle on the western shore of Loch Fyne and another on the Morvern and Ardnamurchan Peninsulas in the West Highlands. In total, JST estimates its floating pier operations help to reduce emissions of CO2 produced as a result of timber transportation from Scotland to the rest of the UK by around 2,574 metric tonnes annually, saving 1.75 million HGV road miles per annum.

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Shard Credit Partners Direct Lending Fund I posts second exit with GadCap Debt Repayment

Posted on by abigailscott
(Photo shows key senior management Paul Seccombe (left) and Michael Baker (right))

 

GadCap Technical Solutions Ltd (“GadCap”) has completed its final debt repayment to Shard Credit Partners Direct Lending Fund I, five years after completing its debt-funded primary MBO in February 2019.

GadCap was established through the spin out of the business and assets of the power generation and aerospace solutions division of a multinational engineering conglomerate in the North East of England.

The direct lending investment by Shard Credit Partners was the first of several primary non-sponsored MBOs financed from its inaugural UK lower mid-market direct lending fund.

Despite encountering numerous macroeconomic challenges throughout its first five years as an independent business, GadCap never missed an interest payment and ensured that it repaid the maximum amount of debt possible each year from surplus cash generated from operations.

 

Alastair Brown, CEO of Shard Credit Partners commented:

“The MBO of GadCap is a model for uncomplicated private credit investing in the UK lower mid-market.  The senior management team are now in the enviable position of owning a significant majority of the ordinary shares in a highly cash generative business with zero debt outstanding.  As a minority shareholder alongside Paul and Michael we look forward to the next stage of our exciting journey together”.

Michael Baker said:

“We will be eternally grateful to Shard Credit Partners for providing us initially with the funds to secure the MBO, but also for their continued belief in the team and the support given over these past five years in helping us realise and achieve our goals.”

Paul Seccombe added:

“We are immensely proud, having come through a couple of uncertain economic years to have successfully paid off the facility loan after five years as we set out in our business plan when forming the company.  We are now in position to review our strategy and provide a platform for the future using Shard as our credit partner as we continue our venture.”

 

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JST Services (Scotland) Ltd completes acquisition of pier and haulage division of TSL Contractors Limited, Isle of Mull, West Coast of Scotland.

Posted on by abigailscott
Roundwood timber being loaded onto a cargo ship at Fishnish Pier, Isle of Mull.

 

Shard Credit Partners’ investee company JST Services (Scotland) Ltd (“JST”) has acquired the pier and haulage division of TSL Contractors Limited (“TSL”), located on the Isle of Mull off the West Coast of Scotland. This strategic acquisition extends JST’s operations in the Scottish timber transportation and logistics industry. Approximately 50,000 tonnes of roundwood logs are loaded onto cargo ships at Fishnish pier each year, to be transported across the open sea to processing centres on the UK mainland.

JST is a unique provider of mobile port logistics and materials handling and transportation services at ports around the UK and Ireland. From its base in Ayrshire, South West Scotland, JST operates a fleet of mobile cranes, timber haulage vehicles, timber handling vehicles, and mobile port handling equipment. Much of its equipment has been developed specially with its clients and equipment manufacturers to undertake complex materials handling tasks, creating a unique IP and patent base.

TSL has operated Fishnish pier on an exclusive basis on the Isle of Mull since its construction in 2014 on behalf of the Scottish Forestry Commission (Forest and Land Scotland) which manages 470,000 hectares of Scotland’s forests and woodlands. TSL’s fleet of HGV’s haul around 50,000 tonnes of timber per year from the surrounding Mull forests to the pier, where it is loaded directly onto cargo ships for transport to timber processing facilities. This operation provides valuable economic activity in a sparsely populated area of the country, in addition to providing an essential service in the maintenance of the ecological supply-chain of the island.

The Fishnish pier activities on Mull are viewed as being particularly attractive to JST, not only from an economic perspective, but also from a strategic perspective. The integration of the Fishnish pier operation into the wider JST Floating Piers division strengthens its network and offering to customer engaged in sustaining the Scottish commercial forestry industry.

Richard Jennings, managing director of JST said:

“This strategic bolt on acquisition to JST’s Floating Piers division in Scotland will enable us to further expand our offering to key customers, especially the Scottish Forestry Commission”.

Alastair Brown, CEO of Shard Credit Partners, comments:

“this acquisition is strongly accretive and will help to accelerate JST’s expansion in the Highlands and Islands, complimenting recent strong organic growth achieved throughout the UK and Ireland since our investment in the business three years ago”.

Legal advice to JST was provided by Gateley Legal, led by Oliver Harker. Financial DD was provided by Azets, led by Graham Cunning and Joseph Sheridan.

Shard Credit Partners’ strategy is to become a leading provider of capital to entrepreneur and management-owned high growth businesses and private equity-owned companies focused on achieving transformational growth and expansion in the UK regions.  During the past five years, Shard Credit Partners has invested more than £150.0 million in supporting regional Management Buy-Out transactions throughout the UK regions and M&A buy-and-build acquisition strategies, as well as growth capital expenditure financing.

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Veremark extends Series A with $4m from Shard Credit Partners and acquires 2 companies in ANZ

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The global Pre-employment screening service will continue to expand its geographic presence across Europe & Apac as well as acquire more businesses

London, 9 May 2023 – Veremark, the global web3.0 pre-employment screening and verified career credentials firm, has raised a further $4m in debt funding led by a new investor, Shard Credit Partners, a specialist lender to the Fintech sector.

This comes just 6 months after its initial $8.5m series A round led by Stage2 Capital and participated in by Samaipata, ACF Investors and Triplepoint and brings the company’s total funding raised to date to $16.3m including early seed and angel investment

Veremark who offers more than 40 kinds of credential checks in 150 countries has seen its client base double since the close of its Series A and now has over 1300+ clients.  The growth in the client base has predominantly been due to the increased ease and simplicity of the platform’s ability to get clients onboarded and help them manage a growing need for international checks.

In addition to furthering its organic growth strategy, Veremark has also acquired Employrite Pty and Employrite Ltd in Australia and New Zealand, strengthening the group’s capabilities across APAC.

As one of APAC’s longest standing pre-employment screening agencies, Employrite brings with it a wealth of industry experience and blue chip client base.  The acquisition encompassed both the Australia and New Zealand books of businesses and IP.

Veremark continues to operates as a globally distributed team with core hubs in the UK, USA, Australia, Singapore, India, and the Philippines, with over 100+ team members servicing clients 24/7.

Daniel Callaghan, CEO of Veremark, said: “We are delighted to bring Shard Credit Partners with us on the journey of transforming how companies ensure the appropriate screening and continued compliance of their employees.  Our mission remains to help the world trust faster and with both Shard and Employrite onboard now we can bring this to reality, not only in our key markets of the UK growth sector, but also across the broader ANZ region.”

Alastair Brown, CEO and Founder of Shard Credit Partners said, “we are delighted to have recently completed this innovative venture debt investment in Veremark to facilitate the geographical expansion into Australia and New Zealand through these two exciting acquisitions. This transaction is in our sweet spot of investing in UK tech-focused SMEs to help accelerate growth and jobs creation.”

Whilst David Birchall founder and Katrina co-founder of Employrite shared, “The marrying of Employrite and Veremark is a great union.  With our market knowledge and presence supported by their state of the art technology and global reach means that we can continue to deliver more for our clients.  We are excited by what the future holds.”

The pre-employment screening market is estimated at $16bn[1] annually, with strong continued global growth expected.  With more than two million screening checks now completed by the Veremark group, the company has a wealth of data to drive further automation and insights as well as continue to pioneer it’s innovative blockchain based credentials offering.

About Veremark: Veremark is a global background screening service that works with companies to run checks on prospective employees, business partners, LPs and founders.  The company operates globally with regional offices across APAC, UK, EU and USA. Since launch in 2019, the company has served hundreds of the world’s top venture backed companies and multinationals to implement better people compliance practices and works directly with Heads of Talent Acquisition to help them improve speed and overall hiring experience. To find out more, please visit www.veremark.com

About Shard Credit Partners: Shard Credit Partners is an alternative investment fund manager focused on private credit strategies in the UK lower mid-market.  Its funds seek to generate superior risk-adjusted returns from conservatively structured senior secured credit investments with equity upside.  Fund strategies include SME direct lending, tech-focused venture debt and global trade finance.  Assets under management currently total circa £200 million. Investors include UK governmental organisations and public and private pension funds in the UK, Europe and Asia.  Shard Credit Partners Ltd is an Appointed Representative of Shard Capital AIFM LLP, authorised and regulated by the FCA.

About Stage 2 Capital:  The first go-to-market venture capital firm, Stage 2 Capital, combines capital and GTM execution expertise, leveraging its elite LP base of 300+ senior executives from unicorns and Fortune 500 firms to help portfolio companies scale revenue and accelerate growth. Stage 2 Capital invests globally in earlier-stage B2B software companies. To find out more, please visit https://www.stage2.capital

About Samaipata: Samaipata is a pan-European venture capital fund investing in digital platforms with network effects at the early stage across Europe. With €150m under management, they focus on backing early stage founders in the UK, France, Germany and Southern Europe. To find out more, please visit https://samaipata.vc/

About ACF Investors: Launched in 2011, ACF Investors (formerly the Angel CoFund) is a privately managed and commercially focused venture capital fund that works alongside sector smart business angels to invest in high potential SMEs across the UK, directly providing funding to support exceptional businesses.

To date ACF Investors has supported 100 companies, including such names as Ebury, Gousto, Creo Medical and Form3, providing more than £50 million in direct investment alongside more than £300 million from business angels and other investors, making it one of the most active early-stage investors in the country. To find out more, please visit www.acfinvestors.com

About Triple Point Ventures: Triple Point Ventures is the venture arm of Triple Point, a purpose-driven investment manager with £2.5bn AUM, creating investment opportunities to help address society’s biggest challenges. Find out more at www.triplepoint.vc

[1] https://www.sec.gov/Archives/edgar/data/1210677/000119312521177004/d147929ds1.htm