BACKGROUND

Finacity specializes in the securitization of accounts receivable, and has succeeded in making receivables securitization less complex, more cost-effective, and efficient for its clients. Additionally, Finacity offers various alternative structuring and placement options in the factoring, ABL, supply chain finance, forfaiting and structured trade finance markets.

Finacity was founded in 2001 through the collective efforts and investment capital of ABN AMRO, Bank of America, Euler Hermes and Amroc Investments. In addition to capital, each partner has contributed people, time, intellectual property, and other tangible assets to Finacity's business and infrastructure. The investing partners are not captive, allowing Finacity to work with funding sources that best meet its clients' needs.

With offices in Stamford (Connecticut), London, and Prague. Finacity services clients in North America, the European Union, Latin America, Emerging Europe, Asia, and the MENA region.

TRANSACTION HISTORY

In Finacity's 11-year history, it has funded foreign trade assets from non- OECD countries, achieved true-sale treatment across complex jurisdictions, owned Special Purpose Vehicles, provided credit insurance covering both corporate and political risks, and structured investment grade deals on behalf of companies with ratings as low as "Caa." In 2009, the Association of Trade & Forfaiting in the Americas (ATFA) selected a Finacity transaction as its "Deal of the Year."

• Supports approximately $55 billion in annual receivables flow


• Generates over 75% of its business in non-US jurisdictions


• Has processed over 10 million invoices per year at peak

CHALLENGES IN THE CURRENT MARKET

Since the beginning of the financial crisis in 2008 through the current European sovereign debt crisis there has been a substantial decrease in the amount of funding for Asset Backed Commercial Paper (ABCP). However, of all types of ABCP, those relating to trade receivables have been the most sustainable and the lone “bright star” in the market with only 0.03% of the 11.4 million trade finance transactions having defaulted between 2005-2010, according to the International Chamber of Commerce. This positive performance can be explained through several key characteristics of trade receivables:

• Receivables have a very short duration which decreases complexity and the likelihood of poor performance


• Duration of the underlying asset is consistent with the duration of the paper funding CP conduits, as such there is no duration mismatch as seen with mortgage backed securities


• Because of their typical obligors, most securitizations are exposed to corporate credit risk as opposed to the generally less desirable consumer credit risk

That said, while the asset class itself has performed quite strongly, the number of capable players in the field has decreased. Therefore there is less capital available today then there was several years ago.

THE FINACITY SOLUTION

Finacity has developed a construct and platform to manage all of the primary aspects of securitizing or otherwise financing a company's trade receivables. As Finacity does not work exclusively with one funding source, it is able to go to the market and identify the most capable investors for its clients. These may be CP conduits, term markets, fixed income investors, bank balance sheets, factors, asset-based lenders or other alternative capital sources. Regardless of investor type, Finacity can quickly identify not only which parties have available capital, but also who will be able to provide the most favorable outcome in a deal. By doing so, Finacity is able to provide optimal value to its clients throughout the transaction.