[Issuer] [email protected] Capital PLC

Thanks for your proposal.

Could you expand more on:

Specifically, what’s the expectation you hold from the Centrifuge Ecosystem on the amount of liquidity that you would expect to come through your Centrifuge Pool?

Even by following the POP process, there is no guarantee of capital for funding a pool. Most of the POPs and Issuers that will be seeking capital through Centrifuge are seeking capital through:

  • Defi Protocols
  • Web3 Treasuries
  • Off-Chain Lenders

And there are a number of other routes to finance the Pool, but I don’t think relying on the Centrifuge Ecosystem to fund this, without some initial guidance or input, will lead to success.

Who (specifically what institutional investors) would you say has shown interest in investing into your Pool on Centrifuge, should you complete this POP process?

Thanks again for all the context and success you’re experiencing.

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Hi, thank you for your message.

Our Inventory Monetisation transactions can be funded also via the traditional routes (securitisation, asset based lenders) and leveraging the Global Inventory Fund (Alternative regulated Fund) we launched recently.

We think that the “token route” could be a complementary funding stream to support our Clients, attracting digital assets investors (retail, family offices, institutionals), accelerating the scalability of our model.

In briefly, we believe on a sort of cross-fertilisation between our multiple funding streams. Accordingly, we do think that, after announcing a first Inventory Monetisation transaction via a dedicated Centrifuge pool, being also our Company listed, we will attract a lot of investors on Centrifuge (an example: just our investors in the listed Company which are thousands).

Hope I replied to your comment.

Best

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Hi Alessandro,

Thank you for your POP submission. I would just like to get some clarification on the funding of the TIN tranche. You write that:

Could you please expand a bit on that (e.g. provide some specific figures, if possible) as it is not entirely clear to me - then it will be easier for the community to score your POP.

And just clarify, you are not planning on funding the DROP tranche yourselves (at least not directly) but try to attract external investors via marketing activities - is that correctly understood?

Thank you.

Orhan

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Hi Orhan,

thank you for your query.

We attach a picture with an example, hope it’s clear.

We confirm that we want to attract external investors to subscribe the DROP tranche.

Best

The Centrifuge community has reviewed the POP for [email protected] Capital PLC , based on the 10 criteria, and the result is: :eight: / :ten:.

SCORE

For each criteria, either a :zero: (criteria not met) or :one: (criteria met) will be given.

Below you will find the results of the individual criteria:

Business Years in Operation: :one:
Off-Chain Institutional Investors: :one:
Strong Pipeline: :one:
Volume Originated last 2 years: :one:
Historical Loan Tape: :one:
TIN Tranche: :zero:
DROP Tranche: :zero:
Pool Value at Launch: :one:
Pool Value in 1 Year: :one:
Asset Maturity: :one:

RESULT

:white_check_mark: This proposal meets the threshold of >66% and has passed step 2.

NEXT STEP

Step 3 will be to get a recommendation from the Centrifuge DAO. This will be done within the next 5 days and the result will be published here on the Forum.

If you want to see all the steps of Stage 1 of the POP process, you can check this post here .

Hi, I’m not really clear what you mean by “we don’t envisage the TIN tranche”. Currently on Tinlake, all pools have to have a TIN tranche. On POCC, we might be able to do a single tranche but that is still in the works. Can you explain what you mean? Even for current issuers who have a off-chain junior tranche: they still have a TIN tranche, which basically acts like the mezzanine tranche.

With a ZERO on TIN Tranche and DROP Tranche, I do not believe this POP has merit to continue.

Yes, the market is growing and it seems this potential Issuer could grow substantially, but the capital stack / partners required to be successful in this moment are missing.

Some more insight into what it may look like for this POP to be successful: [Issuer] POP: Lend East - #9 by ctcunning

Hi,

We thought that avoiding a TIN tranche was a semplification for the capital raise.

If not, we can introduce it.

Best

I actually don’t think it’s mission critical that the entire TIN (junior tranche) be supported by [email protected]

But that take us to the broader question which is connected to the Senior Lender:

What is the capital stack of this Pool shaping up to be at Launch and over the next 12 months?

Hi, thank you for your reply.

Below what we disclosed.

  • Pool Size & Pipeline:
    • At Launch: €10m to €50m (depending on the liquidity/ capital available)
    • 6 Months after Launch: 100m
    • 12 Months after Launch: 250m
    • Origination Pipeline Details:
      • Jurisdictions: concentration in Italy, UK and UAE
      • Current sectors served: Steel, Machine motors and components, food and beverage (with long shelf lives), Capital Goods, Automobiles and Components
      • Combination of Raw Materials and Finished goods across clients

Do you think achievable?

Best

Thanks for re-disclosing.

I don’t know if it’s achievable, specific to the Pool Size.

It’s unclear what lenders and institutional capital providers you’re actively engaged with, whether they be on-chain or off-chain.

My sense is without that work and effort, preceding this POP, that perhaps this POP should be paused and time should be devoted to the capital raising efforts for your Pool.

Hi,

thank you for your reply.

Currently the Inventory Monetisation transations can be funded via our Global Inventory Funds (we copy the investors website, related to the Investment Advisory Company (https://tradeflow.capital/)) and, recently, we announced the alliance with VeChain to deploy the first 10m USD leveragin an NFT issued via VeChainThor (Strategic Alliance with VeChain Foundation - 07:00:03 28 Jun 2022 - SYME News article | London Stock Exchange).

On the other hand, in order to raise capital via Centrifuge, we would need an official launch of a dedicated pool in order to arrange the marketing activities vis-à-vis the [email protected]’ community (investors in the listed companies, potential investors interested in subscribe the DROP tranche, …).

Best

Thanks much for re-surfacing those again.

Are you saying that capital would flow into your Centrifuge Pool via both/either Tradeflow or VeChain partnerships? If so, I think the Centrifuge Community would like to understand their commitment to deploying those funds on the assumption your POP is approved.

I’d like to suggest a language shift:

  • from “in order to raise capital, we need an official launch of dedicated pool”
  • to “in order to launch a pool, we need an official capital structure in place”

The process of progressing through the POP is highly dependent on bringing capital partners to the community.

For example, you can see Blocktower going through a public governance process with MakerDAO here as they approach and consider launching a Centrifuge Pool: BlockTower Credit - Introduction & Arranger Proposal - Collateral Onboarding - The Maker Forum

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Thank you for your reply.

Apologies for the pedestrian question: what’s the value of Centrifuge if you are asking to the issuer to bring also the capital?

Thanks

I think there’s a difference between organizations that need capital, versus those that want to transfer their entire asset management / structured credit from off-chain to on-chain. The latter sees the early days of Centrifuge a very small first step, but hold a vision for the entire ecosystem of asset-backed securities moving on-chain.

The latter are bringing the assets, the capital, and the vision for the future, partnering with Centrifuge to execute that vision.

Our documentation is a great place to start, but there’s also some key ideas being proposed here by Blocktower below, that speak to a long-term vision of the future.

Thank you for the reply.

We can say that we are positioned in this cluster:

The latter are bringing the assets, the capital, and the vision for the future, partnering with Centrifuge to execute that vision.

That said, apologies for this question, what’s the value brought by Centrifuge?

Best

POP Review DCM: HamsaPay

Hi I’m Mike, the Founder of DeFi Capital Markets (“DCM”), an entity in the Centrifuge community that is focused on building the future of decentralized capital markets by onboarding institutional investors, assets and infrastructure to the DeFi ecosystem. Previously I was a core member of the Centrifuge team and we at DCM are currently contributing to the Centrifuge, RWA Market (Aave) and MakerDAO ecosystems. The current, and future, employees of DCM are largely from institutional investment and credit backgrounds and we intend to provide views on proposed pools coming through the POP process. Our views do not amount to financial advice and nothing contained in this post constitutes a solicitation, recommendation or endorsement of any investment. Community members should do their own independent research.

I will reuse my recent macro wrap: Macro conditions have broadly deteriorated across markets as inflation has reached a multi-decade high and has spurred a more aggressive Fed policy. The resultant rise in interest rates has driven a sharp sell-off of global financial assets, crypto being no exception. DeFi liquidity has contracted markedly in the last few months, and recently we have witnessed several large scale insolvencies that have shaken confidence in the sector. As deFi investors retreat and significant swathes of capital are erased from the ecosystem it makes for a notably difficult backdrop to raise new financing. That being said, real-world assets tied to productive cash flows outside the crypto ecosystem offer investors a new avenue to generate yield in a more sustainable fashion. Given the financial conditions, investor appetite for new endeavours is expected to remain limited for the time being, however we are optimistic this could improve once the dust settles and RWAs continue as an emerging trend.

We echo the KF recommendation, having concerns that a lack of capital will remain a constant challenge to succesful launching this pool. The expected senior pricing also looks relatively tight to us given the aforementioned backdrop. Altough we would love to suggest that all process proceed, we don’t currently see merits here at the moment.

k/f recommendation: Do not proceed to Pool Party.

As articulated in the quality conversation above, there simply is a lack of capital demand for this POP at this time. More broadly in TradFi it seems that capital is available off-chain, but unable to move on-chain.

Within the on-chain ecosystem, there does not seem to be capital providers willing (or visibly supporting) the initial launch and/or future growth of this POP.

Thanks @alexzambo for the continued dialogue and the application.

Thank you for your comments.

To be honest we can’t see how an issuer can bring capital if it has not the opportunity to launch a liquidity pool.

We have a lot of investors interested on investing in digital assets route.

We thought that launching an Inventory Monetisation liquidy pool would have been an opportunity for them.

Please Centrifuge Community let SYME know if it’s possible to structure a liquidity pool or not. Accordingly, we will evaluate other DEFI a opportunities.

All the best

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Dear Centrifuge Community,

Hope all the members are well.

Kindly, let us know if we can progress the POP process with the aim that SYME will bring investors on-chain (both senior and junior tranches).

We would like to be ready to pitch the on-chain Investement opportunity in early September.

Kind regards

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