Synthesis Corporate Introduction

* * *

Corporate Introduction

Index

  • 5

    Synthesis Overview

  • 8

    About Structured Trade Finance

  • 13

    Synthesis Procedures

Investment Structures

Bond Solutions

IssuerSynthesis Trade Finance I S.A.
CurrencyUSD (also on ASW in EUR and GBP)
SenioritySenior pari passu notes with an excess spread roll-up
SizeUSD 100 mio
ListingEuro-MTF Market of the Luxembourg Stock Exchange
AuditorPrice Waterhouse Coopers
Legal Counsel for the BorrowerAllen & Overy, Luxembourg
Governing LawLuxembourg
StructureBulletExtendable
Coupon6.50%4.00% + 3M $ LIBOR
Maturity3 Years3 Year, 5 Year
Look-Through and ConsultationYesYes
Coupon FrequencySemi-AnnualSemi-Annual
CalculationACT/ACTACT/ACT
Credit EnhancementYes (CI or LC)Yes (CI or LC)

Our bond structures assume:


  1. The credit is structured around an export contract between an exporter (the seller) and an off-taker (the buyer). Synthesis has the receivables assigned to its account(s), and repayment is further enhanced by secure payment method including Letter of Credit or Cash Against Documents supported by credit insurance or payment guarantee.
  2. A diversification cap of 20%per commodity and geography

Investment Structures

Participation Solutions

Loan AdministratorSynthesis Structured Commodity TradeFinance Limited
CurrencyUSD (also on ASW in EUR and GBP)
SenioritySenior, direct lending exposure
SizeUSD100-200mio
Underlying DocumentationMaster Loan Participation Agreement
Governing LawLuxembourg
Typical StructurePre-Agreed Counterparties with 48 hours notice of drawdown on a funded basis
DiversificationAt the discretion of the lender
Wind-up Period3 months
StructureBullet FacilityExtendable Facility
Average Yield6.00%4.00% + 3M $ LIBOR
Maturity12 Months1 Year +1 Year
Look-Through and ConsultationYesYes
Payment FrequencyTransaction-basedTransaction-based
Utilisation85%88%

Our participation structures assume :


  1. Sensible diversification
  2. Pre-agreed “facilities” that define transactional drawdowns

Synthesis Overview

Background and Entities

Company Information

Synthesis Group of Companies

Synthesis Trade Finance S.A.

STF is a bankruptcy remote company, set up purely to finance structured trade finance transactions. It has an independent Board of Directors with a long experience of the management of collective investment vehicles, risk management and compliance. The Board of Directors is supported by a team of expert Special Advisors in the field of trade finance

Fixed Income
Synthesis Structured Commodity Trade Finance Limited

SSCTF is the UK- based company which originates business. SSCTF works with companies to structure solutions to their financial requirements and helps to arrange funding and a strong security package before arranging funding via STF or via participation agreements

Transaction Participation

About Structured Finance

About the product

About the product

What is the Structured Trade Finance

Structured Trade Finance is the provision of funds to allow commercial transactions to occur between counterparties in different jurisdictions

Traditionally it has been a business controlled by banks, but in recent years more and moreopportunities have arisen for non- bank participants to participate in the sector. Synthesis is the first financial institution to independently securitise trade finance assets

Transactions are typically very short in duration (between 15 and 90 days). Where we can obtain very strong collateral, a maximum of 10% of our portfolio will finance transactions of up to 124 days

The focus of a trade finance transaction is upon the value of the goods being transported, not the balance sheet of the seller, giving us excellent security

Why banks are not as active in the sector as they once were

Why is there a lack of trade finance?

Banks have higher costs and smaller balance sheets

Banks are less likely to provide trade finance credit lines now than in the past. There are several reasons for this. First, the operational costs of financing small transactions can be quite high as it can require large teams of people for a very small margin per transaction. Secondly, many transactions are cross- border and where a bank does not operate in both jurisdictions they may decline to take on such business. Finally, many trade finance transactions are for large amounts compared with the equity value of the company

Banks are focussed on larger clients

With the right experience and understanding of global trade flow, a new breed of trade finance house is emerging, able to lend based upon assets. Synthesis Trade Finance is at the forefront of this transformation

Banks can’t make decisions about clients quickly enough

Banks take time to make decisions. With our strong knowledge of the sector and streamlined risk management and cash management we can generally make a decision very quickly, which is key to companies trying to finance orders andinventory

The four key reasons to look at investing in tradefinance

Why does Synthesis fund trade finance?

Self-Liquidating

Trade finance transactions have a natural conclusion (the sale of the underlying goods) and have little risk of unforeseeable delays in repayment

Strong Security

When we enter into a transaction we typically (although not exclusively) step in as seller, acquiring all of the legal title, the rights to payment from the buyer and any credit support

Strong Returns

Due to the short duration of the transactions, yields on them tend to be higher than on longer, balance- sheet loans, meaning that returns on efficiently deployed capital are higher

Low Default Rates

Trade finance typically funds genuine commercial transactions. With the additional protection of Letters of Credit or Credit Insurance, default rates are far below those of standard corporate loans*

Some facts about the market

Trade Finance in Numbers

The sheer scale of global trade is staggering and this offers a huge market in which Synthesis Trade Finance can operate

USD6 trillion
WTO Member Exports per year

Despite global economic uncertainty, global trade continues to grow year-on-year as globalisation continues

c. 50%
The SME share ofthat trade

SMEs, particularly in fast developing economies, are an increasingly large part of the global supply chain

c. 80%
Of that SME business struggles to obtain funding

As Basel III increases pressure on bank balance sheets, SMEs are proving to be the main victims of the funding drought

0.02% - 0.20%
Is the historic default rate according to ICC Data

If well structured, trade finance transactions can be considered extremely low risk in comparison to other forms of credit investment

Synthesis Procedure

How we operate

How our business operates

Our business model is similar to financing that has been carried on for centuries. We provide funding for companies who have strong business models but need outside help to finance their larger transactions


1. We finance transactions, not companies.

We are not a lender in a traditional manner and we do not provide loans to companies. All funding that we provide is repaid upon completion of the transaction and our exposure ends at that point.

2. We step directly into the transaction.

Most of the transactions that we finance are the simple sales of goods to end buyers. In this case, we are bridging the time gap between dispatch of the goods by the supplier, and receipt by the buyer. W e pay the seller directly, we take ownership of the goods until receipt, and collect sales proceeds directly from the buyer.

3. We always require secured method of payment.

Where letter of credit or credit insurance is not feasible or customary we would require that final buyer pays through Cash Against Documents arrangement plus payment guarantee/performance bond.

The first step in our process is determining whom we work with

Conterparty Selection


In many of our financing activities there can be multiple companies involved – buyers, sellers, shipping companies, warehouses and intermediaries. We have very clear selection procedures on who we will transact with

Minimum three year track record

All of our counterparties must be able to demonstrate that their management has at least three years of experience similar transaction. With all transactions being less than 124 days, this means that it will have taken place successfully multiple times already

Each counterparty must then :
  • Be able to satisfy our KYC and AML procedures for the company, its management and its shareholders
  • Be able to demonstrate a solid client base that is in line with our policies
The next step in our process is to choose what we will fund

Transaction Selection

Unlike traditional bank lending, we are funding specific transactions, so even if we agree to provide funding for a counterparty, we will first ensure that the money will be used for a specific transaction that meets our requirements and the money is returned as soon as that transaction is completed

Asset

The assets that we finance must be fungible and have a liquid market. This means that we focus on non-perishable, quality- checked goods, typically either listed on a mercantile exchange or with a particularly well- developed OTC market

Credit Enhancement

The transactions that we finance are always backed by a Letter of Credit or Credit insurance from an investment grade counterparty, or by alternative arrangements ensuring prompt and secure payment by the customer (performance bonds, payment guarantees)

Loan to Value

Typically we look at a “real” valuation of the asset in terms of what price it can be sold at in a variety of jurisdictions as well as only lending relative to the purchase price

Monitoring and Control

Are we able to identify, monitor and exercise control over the asset at any point during the transaction?

Procedures for new Clients

Establishing a Trade Finance Facility

  • -Referrals from existing clients
    -Pre-existing contacts of Team Members
    -Referrals from existing transaction originators
    -Unsolicited client approaches
  • -Compliance Catalyst via Bureau van Dijk
    -Market references
    -Procedure covers all steps in the transaction chain
    -Managed via internal CMS system and multiple sign-offs are needed
  • -The Facility Letter is indicative and is subject to Lender approval
    -It lays out terms but is not binding for its duration
    -Contains CPsand CSs that will be essential for each underlying trade
  • -Does it meet the Lender’s criteria?
    -Is the product fungible and can we assert security?
    -Are the management team credible?
    -Are there any regulatory hurdles?
  • -Can the transaction be structured in a way that suits the lender?
    -Is there sufficient margin to makethe transaction work?
    -Are we in control at all points of the transaction?
  • -Should the IFOL be accepted, full KYC and facility information is submitted to the Lender for approval
    -Final negotiation of terms occurs
    -Preparations made to transact shortly
Provision of transaction funds

Drawing down on a Facility

  • -Client contacts us to confirm that the transaction meets the terms of the Facility Offer Letter
  • -Lender is notified of the need to provide funding and we confirm that CSs have been met
  • -SSCTF constantly monitors documentation and location of the stock throughout
  • -SSCTF reviews the transaction for any irregularities and ensures that KYC checks are inplace
  • -Funding is released by SSCTF to the Seller, enabling the transaction to occur promptly
  • -SSCTF accept repayment and disburse as appropriate to lenders
How we deal with the key risk factors in our business

Risk Mitigation

  • Supplier Performance Risk:

    All Suppliers will undergo KYCprocedures by SSCTF,including ascertaining and monitoring their ability to supply in a timely manner and their marketreputation.

  • Obtaining Good Title:

    SSCTF will confirm that the Supplier has good title to the goods prior to sale.

  • Quality and Quantity of Collateral:

    All goods will be quality and quantity approved by an approved third party before release of funds to ensure that they will meet the purchaser's requirements upon delivery.

  • Swap Counterparty and Price Risk:

    The Purchase and Sale prices will be determined before the Purchase and any foreign exchange risks are for the account of the client who have agreed to put in place appropriate hedging should it berequired.

  • Eligible Obligor Performance Risk:

    All Obligors will undergo KYC procedures by SSCTF, including ascertaining and monitoring their ability to pay, their market reputation and their pre-requisites for completing the purchase in a timely manner.

How we deal with the key risk factors in our business

Risk Mitigation (...continued)

  • Eligible Obligor Security Risk:

    SSCTFwill ensure that it has an assignment of receivables or be the named assignee or beneficiary of any Letter ofCredit.

  • Eligible Credit Support Provider Performance

    SSCTF will ensure that it is a named loss payee on any credit insurance policy or the direct beneficiary of any such policy Credit support will only be provided by Eligible Credit Support Providers asdefined in the Prospectus.

  • Operational Risk:

    SSCTF will ensure that all documents are received in a timely manner from all parties and will maintain a four eyes principle, whereby two directors check all documents. SSCTF will confirm that the contractual terms for the purchase and the sale are substantially identical and Deliverable

  • Co-mingling of Assets:

    SSCTF will ensure that they continually monitor the location and state of the assets in order to minimize the risk of co-mingling.

  • Other Counterparty Exposures:

    KYC checks will be performed on other parties to each transaction as SSCTF are notified of them. This will include inter alia warehouses, shippers, quality inspectors and any other parties who may affect the value or reliability of the security.

How we deal with the key risk factors in our business

Risk Mitigation (...continued)

  • Other Legal Considerations:

    As of the date of this application, no embargoes or sanctions are applicable to these Proposed transactions. Legal documentation has been approved by Watson Farley& William and to the best of our knowledge is both:
    (i) Enforceable as against all parties and;
    (ii) is in line with market practice.
    The countries in which transactions will occur are listed in this application. SSCT will continually monitor the geopolitical and regulatory landscape to ensure that risks remain acceptable.

Pipeline as of today

Sample Transactions

CommodityFinance TypeFacilityAvg Transaction Utilisation TenorInterest Rate p.a.Underlying RiskRisk Mitigation
Wheat*Port Warehousing financing against inspection & FCR
*FOB Sale on CAD to reputable buyer
USD 10,000,000USD 2,750,00085%4511.00%CAD payment from a reputable buyerDocumentary transaction through top-tier bank , original title is released only upon payment. Payment against copies of documents
Soya*Warehouse financing against inspection & FCR
*CFR Sale on L/C basis
USD 8,000,000USD 1,750,00090%4510.50%Incoming LC from approved Dubai based bankLC at sight from the bank
Barley*BL financingUSD 7,500,000USD 3,750,00090%609.75%Incoming LC from first-tier Swiss bankLC Confirmation by Borrower's bank

Pipeline as of today

Sample Transactions (continued)

*Receivables security
Sunflower Oil*Warehouse financing against inspection & FCR
*CAD Sale
USD 7,500,000USD 2,340,00085%5011.00%100% CAD payment against copies of documentsContract with investment grade buyer plus performance bond. Original title and documents are not released to the buyer untill payment is received
Sunflower Meal*Warehouse financing against
inspection & FCR
*CAD Sale
USD 8,000,000USD 2,750,00080%6011.25%CAD payment from a reputable buyerDocumentary transaction through top-tier bank , original title is released only upon payment. Payment against copies of documents. Credit Insurance is in place.
Rape Seed*Warehouse financing against inspection & FCR
*CIF Sale
USD 6,000,000USD 2,450,00085%5510.25%LC from approved Czech BankLC Confirmation by Borrower's Bank and assignment of proceeds

Pipeline as of today

Sample Transactions (continued)

Rape Seed Oil*Warehouse financing against inspection & FCR
*CAD Sale
USD 6,000,000USD 2,700,00085%609.75%Contract with recognized Switzerland based Commodities TraderCredit Insurance from Pre-approved Insurance Companies
Sugar*BL financing
*L/C Sale
USD 5,000,000USD 1,250,00080%4012.00%Incoming L/C at sight from reputable German BankConfirmation of L/C by borrower's bank
Fertilizer*Warehouse financing againstUSDUSD 3,500,00090%6010.25%CAD payment from investmentCredit Insurance, assignment of proceeds
FCR8,500,000grade buyerand joint account with the borrower
*CIF sale on CAD
We can utilise the following banks and insurers to enhance protection

List of Eligible Credit Support Providers

ABN AMRO BankN.V.Industrial & CommercialBank of China Limited
Abu Dhabi Commercial Bank PJSCIndustrial Bank of Korea
Agricultural Bank of China LimitedING Bank N.V.
Australia and New Zealand Banking GroupLimitedJP Morgan Chase Bank N.A.
Atradius Credit Insurance N.V.Korea Development Bank
Bank of China LimitedLloyds Bank Plc
Bank of Communications Co., LtdLloyds of London Insurance Syndicates
Bank of Nova ScotiaMalayan Banking Berhad
Banque Cantonale VaudoiseNational Australia Bank Limited
Barclays Bank PlcNational Bank of Abu Dhabi PJSC
Bayerische Landesbank (Bayern LB)National Bank of Kuwait S.A.K.P.
BNP ParibasNorddeutsche Landesbank Girozentrale
China Construction BankOversea-Chinese Banking Corporation Limited
Citibank N.A.Qatar National Bank S.A.Q.
Coface S.A.Royal Bank of Canada
Coöperatieve Rabobank U.A.Santander UK plc
Crédit Agricole S.A.Skandinaviska Enskilda Banken AB
Credit Suisse AGSociété Générale S.A.
CTBC Bank Co., Ltd.Standard Chartered Bank
DBS Bank LtdThe Toronto-Dominion Bank
Euler Hermes S.A.UBS AG
Export-Import Bank of KoreaUnicredit Bank Austria AG
Garant Versicherungs AGUnited Overseas Bank Limited
Hang Seng Bank LimitedWells Fargo Bank N.A.
HSBC Bank Plc

Our People

Biographies

Management


Spyros Papadopoulos

Founder & CEO

Spyros has 20 years of experience in alternative investments. He began his career in Private Banking, first with Citigroup in London and Geneva, where he was the key contributor to the development of both the Spanish and Greek Wealth Management Desks, and then with Société Générale in Athens, where he was instrumental to the expansion of the Greek Private Banking division. Spyros resigned from Private Banking in 2006 to set up an asset management company for Deloitte, before returning to London as Director of the hedge fund Absolute Return Partners. He left to set-up Synthesis in June 2009. His clients came through unscathed, and indeed profited, from the crises of 2000-02 and 2008. Spyros holds the Investment Management Certificate of the CFA-Society of the UK

Management


Philippe Jouard

Managing partner

Philippe Jouard gathers more than 30-year successful international banking career in wealth management, investment banking (origination, structuring and execution of international corporate and project finance transactions) and private equity, both in Europe and the Middle East. In addition, Philippe held numerous regulated board level and C-level positions in major global banking groups such as JP Morgan, UBS, Dexia-BIL and Edmond de Rothschild, with full regional responsibilities of successfully launching and / or managing strategic business lines in his capacity of CEO, Chairman or Executive Director of such boards. Philippe holds a Master Degree in Finance and Economics from HEC (Paris), where he was also a visiting Professor, and an Advanced Management Degree from the Wharton School (UPENN-Philadelphia).

Management


Thierry Schlagdenhauffen

Managing Partner

Thierry justifies 28 years of transferable experience in green field projects and restructuring. His expertise encompasses setting up new businesses and turning-around large, existing ones. He has successful track record for leaders in Construction materials (Saint Gobain and CRH), Aerospace (Airbus), and Transportation. He started his career with Saint Gobain, first learning the trade, restructuring the Paper and Wood division before leading the divestment of the tableware plants. He then joined the high-performance division of Airbus to develop the French activities and restructure the Canadian subsidiary. He then started the PPP/PFI activity of Airbus with contracts awarded in France, UK, Germany and Australia. In the US, he reorganized first the rolling stock activity of Alstom, and then the Architectural products of Oldcastle APG (CHR Group). Thierry also fulfilled various C-level interim management positions in IT companies to reorganize and restructure their finance departments. Lately, he has led the finance functions for the Qatar railways projects, before fulfilling various missions of M&A in the Middle East and structuring real Estate, Construction and Industrial projects for a Private Equity office in Africa. Thierry holds a master’s in business from ICN business school, Nancy (France) and a MBA – RIT from Rochester, New York (USA).

Management


Matthew Edwards

Investor Relations

Matthew has over 27 years’ experience in financial services. He began his career with Tullet and Tokyo in the city of London in 1990 where he quickly established himself as a leading broker. Matthew worked for two other leading brokerage houses in London before moving to Athens in 1997. He was head of all foreign exchange activities for Sigma money brokers who under his guidance became the global benchmark for GRD brokerage. He has since acted as a business development consultant for ICAP London, BGC Partners and Cleaves Securities. Throughout his career Matthew has developed and managed key client relationships and maintains strong relationships with banks, brokerages and private equity firms.

Management


Jerome Laurre

Member of the Advisory Board

Jerome has 25 years experience in investment banking and capital markets with a strong focus on origination and structuring of Strategic Equity solutions for Corporates, Financial Institutions, Family Offices and Sovereign Wealth Funds. Experience was acquired in London (UK), New York (US) and Paris (France) covering wide ranging geographical client bases including the Americas, Europe, Middle East and Africa. In 2009, he founded Beyond Solutions™, an advisory boutique specialized in designing bespoke recommendations in Strategic Finance. Before that, Jerome was head of the Strategic Equity business for the EMEA region at Barclays Capital for 5+ years. He set up the business there and grew it to a team of 14 professionals. Prior to joining Barcap, Jerome launched the Strategic Equity business for the Americas at BNP Paribas New York in 2002 after 5 years running the Strategic Equity business for Europe. Jerome started his career in Investment banking at Banque Indosuez, which is now merged within Credit Agricole Investment Banking, where he initiated the Strategic Equity business.

Management


Joseph Samuel

Member of the Advisory Board

With more than 15 years broad experience in the legal and financial sectors, Joseph is an experienced management professional, having grown, re-organised and co-ordinated a number of funds, businesses, teams and departments, with full P&L responsibility and an excellent track record. A key element of his work has been doing business face to face internationally, having undertaken business trips across five continents to more than 50 countries, and with clients in more than 150. In 2015, he founded Old Park Lane Consultancy Ltd, through which he consults on fund structuring, capital raising, product development, international business and communications for a number of clients.

Disclaimer


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Neither this Communication nor any of the associated documents may be reproduced, re- transmitted or further distributed to any other person or published, in whole or in part, for any other purpose than that stated above. The information in this document, which is in d raft form and incomplete, is subject to updating, completion, revision, further verification and /o r amendment. In particular, the documents refer to certain events having occurred which have not yet occurred at the date these documents are made available, but which are expected to occur prior to the publication of an approved prospectus in final form. Recipients of this Comm unication (or any of the associated documents) who are considering purchasing or subscribing for Notes in any of the issuers are reminded that any such purchase or subscription m ust be made only on the basis of information contained in the approved prospectus its final form, which may be different from the information contained in this document. Notes may not at this time be offered by any of the issuers directly to the public. Neither this Communication nor any of the attached documents constitutes an offer of Notes.

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To the extent permitted by applicable law and regulation, Synthesis Trade Finance S.A. and its affiliated companies expressly disclaims and excludes any and all liability that m ay be based on this communication and the attached documents, any errors in it/ them or omissions from it/ them.