Truell's Tungsten takes on banks in supply chain finance
Tungsten Corporation, the cloud-based electronic invoicing company founded by financier brothers Edmund and Danny Truell, has launched a banking operation in a bid to capture a greater market share of the global supply chain finance (SCF) market.
Tungsten Bank, formed as a result of Tungsten’s £50 million acquisition of the UK subsidiary of First International Bank of Israel (FIBI Bank) in June, forms a crucial piece in Edi Truell’s plans to take market share from larger banks in the processing of billions of suppliers’ invoices for governments and large companies, and in discount invoicing – advancing cash to suppliers.
Large banks have broadly retrenched from this business since the 2008 crisis, creating an opportunity for Tungsten to enter SCF and fill the void left by the traditional banking sector. And Truell plans to make an impact with Tungsten.
“I’m not modest in my global ambitions,” Truell tells Euromoney. “We have lined up over £10 billion ($17.1 billion) in finance for this operation on an annual basis. We intend to operate on a global basis, and at a considerable scale.
“The network processed $185 billion in invoices last year, so there is already an enormous flow of opportunities happening over the network.”
Private equity investment and advisory firm Blackstone are reportedly looking to invest $200 million in Tungsten.
Truell wants to grow Tungsten’s invoice-processing volumes to up to $1 trillion a year, and provide discount invoicing or cash-advance financing of up to $100 billion. That is quite exceptional growth for a company that was founded in 2012.
Tungsten has more than 120 government bodies and multinational companies using its e-invoicing network globally, including the US department of veterans affairs and blue-chips Aviva, BP, Caterpillar, GM, GSK, Kellogg’s, Tesco and Unilever. The network operates in 46 countries throughout the world, having launched in Brazil, Turkey and UAE earlier this year.
Truell says there are plans to increase the number of staff, but not by much. Tungsten has 270 staff globally, and at the time of acquiring FIBI Bank, it had around 25 staff.
“We are looking to increase that number by another 15, but really we shouldn’t need more than 40 or 50 people in total – which, given the scale of the operations, is very lean,” says Truell.
Having a banking licence allows Tungsten to accumulate deposits, enabling it access to, and provision of, a cheap form of funding. However, Truell says he has no plans to offer any other banking services beyond e-invoicing and discount invoicing.
“Tungsten is very much special purpose, and will only ever be involved in supply chain and trade finance,” he says.
“We don’t do anything else and we don’t intend to do anything else. Everything will be done in scale and to a cost-effective manner. And we will be doing [this] as a properly authorized bank, ensuring that we are fully compliant in every country that we operate in for tax and regulation.”