1. Trade Finance
© Berlin 2016

2. Content
1. What is TRADE FINANCE? 2. What are the types of TRADE FINANCE? 3. How big is TRADE FINANCE? 4. Benefits of TRADE FINANCE 5. What is SUPPLY CHAIN FINANCE? 6. A word about TRADE FINANCE in the GCC +Middle East 7. A word about complex PROJECT FINANCE

3. When does a company not have enough cash?
1.What is TRADE FINANCE?
When does a company not have enough cash?
• Trade Finance is the practice of timely providing cash to an entity that needs it
and doesn’t have it.
• A company may need cash that it doesn’t have, due to one, more or all of the
following circumstances:
• its cash is “locked up” in open invoices
• its cash is “lost” in un-paid invoices (delay/default, bankruptcy/insolvency of
buyer(s))
• its cash is “reserved” to pay current liabilities

4. 2.What are the types of TRADE FINANCE?
Who practices TRADE FINANCE?

5. 3.How big is TRADE FINANCE?
What is required to apply for Trade Finance?
• Trade Finance is a huge driver of economic development
• WTO estimates that 80-90% of global trade is reliant on some form trade
finance, and is estimated to be worth around USD $10 trillion a year
• It is challenging for an SME to receive Trade Finance from traditional banking
institutions because the latter views the former as “not very profitable & risky”.
• To apply for Trade Finance, the following are the requirements:
• Audited financial statements
• Full business plan
• Financial forecasts
• Credit reports
• Details and references of directors
• Information on assets and liabilities

6. 4.Benefits of TRADE FINANCE? What does “more cash” lead to?
More working capital and better cashflow management
• meet ‘day-to-day’ running costs
• fulfil larger orders from clients
• buy in bulk and drive down cost of sales
• reduce bankruptcy risk (most of the risk is taken up by the trade financier)

7. 6.A Word about TRADE FINANCE in the GCC + M.E. Is it booming there?
• As of 2015, • nearly US$ 2.5 Trillion (GCC const. projects) • over US$ 4.0 Trillion (Wider Middle East) • Investment banks, financial intermediaries (M&A advisory, VC, PE, PB, TF) • Some names (DIFC): • Merrill Lynch, Deutsche Bank, Morgan Stanley, NATIXIS, PWC, Goldman Sachs, Citigroup, HSBC Bank

8. 6.A Word about Complex PROJECT FINANCE An illustrative example
• Project Amount = 700,000,000 USD • Project Location = African Nation • Borrower = Government of African Nation • Borrower guaranteed by = International Development Bank (e.g. World Bank) • Contractor = world class contracts • Construction/ disbursement period = 58 months (2.41 years) • Tender closing date = 15-Jan-2017 • Advanced condition = 15% (of 700,000,000 USD) • Grace period = ? • Repayment period = ? • Required Guarantee = ? • Interest Rate of Facility = ? • Fees = ? (Management, Insurance premium, etc.)

9. Thank you! GERMELA GmbH Kronenstraße 1 10117 Berlin Germany
Dubai Office:
Vision Tower, Floor 17
Business Bay, Dubai
UAE
Phone:
Fax:
GERMELA GmbH
Kronenstraße 1
10117 Berlin
Germany
Hamburg Office:
Lehmweg 17
20251 Hamburg
Phone: +49 (40)
Fax: +49 (40)