Fintech company aims to bridge mainland SMEs with overseas investors

Vittorio De Angelis, co-founder and executive chairman of Velotrade.

IN February this year, Velotrade, an account receivables financing platform headquartered in Hong Kong, partnered with the Shenzhen Qianhai Financial Assets Exchange (QEX) to execute its first cross-border trade receivables transaction involving a company on the Chinese mainland.

“The transaction involved a hospital which bought medical equipment from this small supplier of medical equipment on the Chinese mainland. The term was 90 days. So this meant that the supplier - without Velotrade - was not able to get the money upfront to pay its rent and salary. The investors were from Hong Kong,” explained Gianluca Pizzituti, co-founder and CEO of Velotrade, adding that the one-million-yuan transaction serves as a small test case for them.

Velotrade has opened the door for foreign institutional investors to Chinese trade receivables. “So before this partnership, for corporations on the Chinese mainland to obtain working capital, there was just the domestic market. It was very difficult for them to go outside of China to get offshore financing. Likewise, it was also very difficult for overseas investors to get exposure to transactions on the Chinese mainland because of capital restrictions and the sort,” Pizzituti told the Shenzhen Daily.

The fintech company partnered with QEX for its ability to transfer assets cross-border, while the fintech company itself enjoys strong distribution capabilities.

With a seasoned international background in trade finance and financial services, the co-founders know that since the financial depression, there has been so much money in the market and fund managers are desperate to find high-yield assets.

“On the one hand, there are corporations that are desperate to get financing. On the other hand, there's this massive amount of liquidity that is looking to be employed. So we built the platform to have the liquidity flow through it and through QEX, to corporations that desperately need it,” said Vittorio De Angelis, co-founder and executive chairman of Velotrade.

De Angelis said that there is not much information in Europe and the U.S. about China. Though many see China as a holder of great opportunity, they also see it as a bit of an unknown territory because they don't know much about it. “Our function is to clarify those doubts to make sure that we access good business in China. And there's a massive demand outside.”

One example De Angelis cited is a U.K. fund which is focused on trade finance. “They understand that the beauty of the product is that it is a short-dated, very high-yield, but very safe transaction. And we are aiming for transactions between very large buyers and decent sellers. So for them, trade finance is the main source of assets. They're very active in Europe and in the U.S. but they don't have anything in Asia,” said De Angelis.

Though only recently established - with the company founded in 2015 and the platform in 2017 - Velotrade is now in expansion. Currently they have around 30 employees in China's Hong Kong and Vietnam, but they are also setting up offices in Taipei and Shenzhen.

“Actually we are in the process of hiring people here and we’ll probably set up the office in Futian because of our partnership with Ping An,” said Pizzituti.

The company is part of the ten companies included in the first batch of the Ping An Fin+Tech Accelerator in 2018, which is fully supported by the Futian District Government. It is also the first fintech company in Asia under Licence Type 1 authorized by the Securities and Futures Commission (SFC), which regulates the financial markets and services in Hong Kong.