POP: HamsaPay Inc

Real World Assets Pool Onboarding Proposals (POP)
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Overview:

  • Business Name: HamsaPay Inc.

  • Current AUM: Not applicable

  • $ Volume of Transactions Completed Last 12 months: Not applicable, as new program

  • Target Launch Date: Official launch on mid of July, 2022

  • Location and Team Size: San Francisco, 27 FTE as of June 2022

  • Years in Operation: (If less than 2 years in operation, number of years founding team has worked together)

HamsaPay operated for less than 2 years. Some of our Co-founders have worked together for over 10 years in leading Financial Service Organizations like Amex, Apple, AliPay:

  • CEO of APAC who was Amex China GM, Director of Apple Pay APAC

  • CTO who was the CTO AMEX China, Head of Global Payment Engineering Alipay

  • COO who was COO/CTO of Amex China, BD Head of Apple Pay APAC

  • Historical Loan Tape (years): Our trade finance desk has combined 40+ years of banking experience that managed $600MM+ trade finance assets on average.

  • Key Professional Partners:

Legal - Sullivan & Worcester UK LLP
Compliance AML & Sanction - World Check from Refinitiv
Accounting - The David Powell, Inc. Financial Services Division
Operational - Hamsa Trade Limited, a HongKong registered SPV (Originator)
Operational - Singapore Mobility Corporation Pte Ltd,. (Operation)

Strategy:

  • Business
    • Describe your business and go to market strategy.
      • What makes your approach unique within your industry?

HamsaPay Inc. (“HP”) is in the business of democratizing access to capital for small and medium sized enterprises (SMEs) by working with aggregators such as e-commerce platforms, and through its blockchain native platform, collects, and makes available, the necessary data to de-risk supply chain finance transactions. On the other side, HP seeks to make these assets available to interested investors in a DeFi environment, thus democratizing opportunities to invest as well. HP was established in Bay Area California in 2020. From the start, HP has had a global horizon thanks to its Founder and Leadership team. As of today, there are 28 full time employees across multiple locations and time zones, including US, Canada, Brazil, HK and Mainland China. In addition to our cutting edge technology platform, we believe we’re unique in following areas:

The Founder – our CEO, Adam Zbar, is a serial entrepreneur. Thanks to his unerring instinct for business, he brought several businesses into success and today these businesses worth billions of dollars;

The People – members of our leadership team share the common belief and gave up their high positions in various well-known companies, such as Amex, Apple, Alipay and Citigroup to join our company. Their talent and experiences in tech and financial areas are no doubt the great assets for us to conquer challenges in business and make us stand out amongst competitions.

The Bridge – Firstly, we believe DeFi is the revolution and future of our existing financial system. Connecting the real-world trade asset to DeFi world is the right path to democratize this area. Secondly, we focus on cross-border trade finance. There’s a $1.7 trillion liquidity gap in this area. It’s especially difficult for those SMEs to access capital for their working capital needs. We’re devoted to helping those businesses to get access to capital with real trade assets and help them grow. Our Platform supports: asset risk rating, tokenization, pooling, and trading on private marketplace. The Platform also supports Factoring, Reverse Factoring, Purchase Order Finance, Buy Now Pay Later, & Inventory Finance.

  • Why are you a good partner for Centrifuge?

We believe Centrifuge and Hamsa share the same vision and belief. It is evident Centrifuge is already helping bring real-world assets into the DeFi world. Using Centrifuge’s established platform can help accelerate our ability to raise funds and provide liquidity to this underserved area of RWAs.

  • How do you differentiate yourself from competitors?

We have a significant pipeline of assets (initially $30 million) that can quickly scale to over $1 billion in real-world trade assets, and a deep understanding and belief in DeFi. We built our blockchain native technology platform to not only digitize and track these assets, but also to risk manage and settle the underlying transaction.

  • How is your entity financed today, what are the current sources of capital:

  • Equity raised: Venture Equity $9M plus a $5M Uncapped Convertible Note With 15% Discount Into Series

  • Debt raised: Venture Debt $2.5M Facility With 1st Tranche $1.75M utilized.

  • What is your entity’s revenue/fee model:

    • Origination fees: 1% Fee for Origination, and 20-50 bps Technology Platform and Servicing Fee.
    • Target spread: APRs range from 10-30% depending on risk characteristics. Terms range from 20 to 90 days.
    • Other: N/A

  • Capital

    • Please explain the source(s) of, and ability to scale, your first-loss junior (TIN) capital in the pool:

We have a $100M term sheet from an institutional investor to fund opportunities that fit our In-The-Box Risk Analysis Criteria.

  • Please explain the source(s) of, and ability to scale, your senior (DROP) capital in the pool:

We are in conversations with major institutional investors such as banks for this. We’re also interested in crowd-funding this via DeFi.

  • Capital relationships and how much you will bring through Centrifuge KYC to invest in either senior or junior tranche of your pool:

We have a $100M term sheet to invest to fund opportunities that meet our risk criteria. We will determine how much to allocate to the Centrifuge ecosystem based on its efficiency and efficacy.

  • DeFi
    • Outline why DeFi is important to your business strategy:

DeFi is an important alternative source of liquidity to fund our programs that are currently and will be helping our clients gain better proceed access to working capital.

  • Articulate why Centrifuge’s community and protocol is a fit for financing:

We believe the democracy and transparency of Centrifuge’s community and protocol create a fair and effective environment for financing.

Structure: Risk & Terms

  • Please explain the key risks inherent in this opportunity and asset class:

As of this day, our asset is derived from account receivables of our seller clients. Thus, the key risk associated is credit risk. In addition, there will be compliance risk. We have developed a comprehensive risk management policy to address the risks:

Compliance mitigants:

  • Reperformance of KYC on our seller clients, both entity level and ultimate beneficial owners.
  • Automated AML and sanctions screening on seller and buyer;
  • Underlying trading goods & service screening.

Legal mitigants:

  • Receivables purchase agreement includes: recourse on seller;
  • Right of offset on seller’s assets and cash;
  • Right of stop new finance at Hamsa’s discretion;
  • English law as governing law

Operation/system mitigants:

  • Obtaining first hand trading data/info;
  • Eliminating probability of double financing;
  • Ongoing transaction data monitoring until full repayment on due;
  • Third party trade data validation;
  • Ongoing review on seller’s collateral asset;
  • Automated operational process.

Credit mitigants:

  • Established prudent and effective credit criteria;

  • Ongoing monitoring seller’s profile and underlying trade activities;

  • Pool Size & Pipeline:

    • At Launch: Nil
    • 6 Months after Launch: $10MM
    • 12 Months after Launch: $50MM
    • Origination Pipeline Details: 4,000+ eligible sellers referred by ecommerce marketplace partner

  • Asset & Rates:

    • Asset Type(s): Trade Receivables
    • Average Ticket Size: $5,000
    • Average Asset Maturity: 20 days
      *** Expect Default Rate:** < 0.5%
    • Expected borrowing rate on senior tranche (on-chain): 4% - 7%
    • Expected lending rate to end borrower (off-chain): 12% - 16%
6 Likes
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Thank you for this POP and for taking the time to walk us through this and bring it to the community.

Given market conditions, and how difficult debt financing has become most especially for RWAs in DeFi, this 100M term sheet obviously caught my eye.

Yes, you also submitted this:

Pool Size & Pipeline:

  • At Launch: Nil
  • 6 Months after Launch: $10MM
  • 12 Months after Launch: $50MM

Here’s my questions:

  1. If 100M term sheet is in hand, what’s preventing you from using that 100M immediately on the 30M in RWAs (initially in your pipeline)?
  2. If efficacy / efficiency are important to you, why not just spin up an off-chain SPV and finance this through traditional means?
  3. If there’s true value add through Centrifuge, and on-chain securitization through DeFi, is your institutional investor committed to distributing this 100M through your Centrifuge Pool should it be launched?

Depending on these answers, I’d propose that the institutional investor / partner come to the table and perhaps join the Centrifuge Community?

If you what you are writing is true, I believe this POP has value and merit to all of DeFi.

3 Likes
3

The Centrifuge community has reviewed the POP for HamsaPay Inc, based on the 10 criteria , and the result is: :seven: / :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: :zero:
Historical Loan Tape: :one:
TIN Tranche: :one:
DROP Tranche: :zero:
Pool Value at Launch: :zero:
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.

4 Likes
4

Hi there,

Thanks for the feedback. Hope the following clarifies your questions.

Q1: If 100M term sheet is in hand, what’s preventing you from using that 100M immediately on the 30M in RWAs (initially in your pipeline)?
A1: We are utilizing the $100M to fund the first $30M in RWA. However, we believe in the long-term, a DeFi strategy is better for all parties. We have sufficient demand to quickly exceed the existing term sheet and believe that we will be able to offer superior returns to our investors, and lower rates to our borrowers through DeFi sourcing.

Q2: If efficacy / efficiency are important to you, why not just spin up an off-chain SPV and finance this through traditional means?
A2: We have established an SPV in the marketplace to facilitate a quick launch. As noted above we believe we can deliver and effective and efficient solution in a DeFi environment. We don’t see them as separate or exclusive.

Q3: If there’s true value add through Centrifuge, and on-chain securitization through DeFi, is your institutional investor committed to distributing this 100M through your Centrifuge Pool should it be launched?
A3: While our current agreement excludes DeFi, the investor is open to that and if we get to the right place, would present the opportunity.

1 Like
5

I’d like to combine your answers to q1 and q3 and pose a proposition:

Why not re-write the agreement to allow for the first $30M of your $100M line to fund your Centrifuge Pool?

I’d imagine the Centrifuge Community would find this POP quite compelling if that was possible.

Is it possible?

6

Our current terms were negotiated as an off-chain SPV structure. Those terms are not currently subject to change or renegotiation. Our investor has indicated an interest in considering on-chain participation AFTER our current program, so if we are selected to launch a Centrifuge Pool, we would certainly present the opportunity. Our interest in launching a Centrifuge Pool is in part to confirm the viability of going directly to DeFi, as such bring a matched set of assets and investors doesn’t seem to advance our understanding of the opportunities.

7

Thanks for this insight.

If you’re seeking to go directly to Defi, I think the ability to bring capital on-chain and expand the ecosystem of capital markets is compelling. When the capital remains off-chain, it’s not as interesting.

That said, if seeking Defi capital is the objectives, would be curious to know who and how you’re approaching in DeFi to fund your Centrifuge Pool. I think the assumption being made here, is that if you’re not bring off-chain capital on-chain, there is demand in Defi for your assets whether that be from protocols or other sources of capital.

8

k/f recommendation for HamsaPay Inc POP: Pause POP Process.

Here’s why:

  1. Proceeding in further steps of Pool Party, Due Diligence, or Pool Structuring are all secondary to discovering a Senior Lender that is capable of financing this Pool from $0 to 50MM. More explanation here: [Issuer] POP: Lend East - #9 by ctcunning

  2. Without an initial seed capital at Pool Launch, it seems there’s more work to be done in understanding how to fund the Pool from not only capital perspective, but perhaps technically how to launch it as well.

I’m looking forward to hearing more from @HamsaV on potential ways to re-work this POP into something more acceptable / motivating for the Centrifuge Community

9

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. We are encouraged that the asset maturity is short-term, this is favourable in the current market. We also believe that the upperbound of the expected senior financing rate is competive given the asset duration. That being said, we don’t believe these factors are enough to gauruntee a succesful launch given the above market recap.

2 Likes