Commodity trading group Gunvor and GE Capital have launched a €225m factoring programme for Gunvor’s receivables portfolio to finance part of the group’s German refining business.
The deal is a part of a broader strategy by Gunvor, which is registered in Cyprus and has its main trading office in Geneva, Switzerland, to diversify its financing base while reducing liquidity risk throughout its businesses.
“By freeing up trade finance lines we are creating more liquidity and more opportunity. So instead of just getting a bigger gas tank, factoring makes our financing engine more efficient,” said Gunvor’s Chief Financial Officer Jerome Schurink.
Gunvor is one of the first trading houses to establish a factoring programme as a way to diversifying support for its operations. The deal represents the largest single receivable finance programme in Germany.
The group said that the programme’s structure offers several advantages, including:
- Diversifying away from traditional financing sources.
- Quicker than securitisation programmes, which bear some liquidity risks in uncertain times.
- Cost of financing is based on the receivables rather than on the seller itself.
- Financing can be arranged without any recourse and will not dilute the existing lenders’ position.
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