Dignari Capital Gives $50M To Sheng Ye Capital For SCF Innovation

Dignari Capital has agreed to provide $50 million to Sheng Ye (SY) Capital in a strategic collaboration to explore new supply chain finance options for small- to medium-sized businesses (SMBs), according to a press release.

The company’s services include collaborations with blue-chip enterprises in the fields of infrastructure, energy and medical business, all of which are more resilient to economic cycles. SY Capital provides accounts receivable (AR)-based supply chain financing services to those kinds of companies, which Grace Tan, founding partner of Dignari Capital said is a ripe field for expansion.

“We are very optimistic about the supply chain financing industry and see substantial financing needs in China’s underserved [SMB] sector,” she said, according to the release. “SY Capital is able to provide flexible and efficient financial services to upstream [SMB] suppliers and at the same time maintain a good risk control record with a zero non-performing loan ratio. Factoring assets, based on large blue-chip core enterprises’ payables, are high-quality credit assets.”

The release stated that supply chain finance has been effective as a way to fund SMBs and has been supported by the Chinese government. The investment from Dignari Capital will work to expand access to different funding channels, including credit funds and help with risk management, the release stated.

Tung Chi Fung, chairman of SY Capital, said there are already plans in the works.

“Going forward, we will consider launching a supply chain financing credit fund asset management platform to further optimize our asset-light strategy and expand our asset scale and market share more rapidly,” he said, according to the release.

SY Capital, early in 2020, was able to achieve growth in spite of the pandemic with its technology capabilities. The company offered financing services for small, medium and micro-sized enterprises in China, with a 46 percent increase in net profits, the release stated. Income from information technology jobs also increased, with a 12-fold jump from the previous year.

Currently, some of SY Capital’s long-term institutional investors include China Taiping, Pavilion Capital, a subsidiary of Temasek, and Olympus Capital, according to the release.

In August, the Global Supply Chain Finance Forum issued warnings against companies entering into payables finance programs that might be detrimental. For instance, if companies don’t urgently need money, they shouldn’t feel pressured to join such programs, the organization said.