Today, Switzerland-based Komgo said it had acquired Canada’s GlobalTrade Corporation (GTC) for an undisclosed sum (below). The acquisition completes the marriage of customers and banks on the same trade finance platform. GTC incorporates its 120 large multinational clients and its 11,000 subsidiaries that use its trade finance solutions.

On the other hand, Komgo has a dozen banks as shareholders in its blockchain trade finance network.

Both companies are heavily focused on digitizing the Letter of Credit process. Komgo positions itself as a commodity trade financing platform. Many of GTC’s customers appear to be industrial, although they are likely to purchase large amounts of commodities. Several of Komgo’s investors are active in commodity markets, particularly oil, such as Shell, Total, Mercuria and Gunvor.

“Together, Komgo and GTC will provide the broadest coverage and highest volumes for our corporate and banking users,” said Souleïma Baddi, CEO of Komgo. “We are combining Komgo’s commodity expertise with GTC’s industry expertise, consolidating the digital business services market. Trade finance is moving towards a digital framework and we are proud to be at the forefront of this transition.”

GTC’s clients include manufacturers Airbus, Daimler, Ericsson, Siemens, Volvo and Vesta, defense contractors MBDA Missiles Systems and SAFRAN, and technology firms IBM, Microsoft and Nokia.

For Komgo, this is not its first acquisition after acquiring another commodity trade finance platform, TRAFEC, in 2020.

In June 2021, Komgo announced its latest financing of CHF 26 million ($27.5 million). Based on the following logic, we speculate that the acquisition cost was a similar amount.

The share register showed a capital increase of 6.75 million shares on June 21, implying a possible valuation of CHF 3.85 per share. Two weeks ago, an additional 6.9 million shares were issued for an unknown amount. Using the valuation of June 21 would give a figure of CHF 26.5 million. That provides a highly speculative ballpark for the acquisition amount.

“The industry has been waiting for this consolidation,” said GTC Chairman of the Board Jacob Katsman. “Together with Komgo, we can now connect companies with all their financial institutions for trade finance, regardless of the administrative system they use. The solutions offered by both companies are complementary and cover the full range of payment instruments used in international trade”.

In addition to consolidation, the trade finance sector has also seen some recent closures, including the bank-backed blockchain platform we.trade. Yesterday, Maersk announced that the TradeLens blockchain shipment would be shutting down.

Despite the bad news, there is still enormous potential in the sector. Commerce is in the early stages of the digitization process. A key piece of paperwork for letters of credit is the bill of lading when a ship is loaded. Last year, only 1.5% of bills or shipments were digital like eBL.

Komgo’s bank shareholders include ABN Amro, BNP Paribas, Citi, Credit Agricole, Credit Suisse, ING, MUFG, Natixis, OCBC Bank, SMBC, Societe Generale and RaboBank.