Contributors: Ian Henderson , Chief Investment Officer; Vince Freemantle CA(SA) CSb(SA) , Chief Operating Officer; Donovan Lindhorst , Head of Legal and Risk; Eran Singh , Portfolio Manager; Tshepiso G. , Portfolio Manager; Jessie-Marc Musungayi , Junior Portfolio Manager; Angela Paschalides , Legal Advisor; Abby Grabe , Junior Legal Advisor; Nkateko Maimane , Investment Analyst; Nozipho Zulu CA (SA) , Investment Analyst; Katlego Dunjana, Investment Analyst; Kirsten Hardie , Senior Facilitator; Trudy Govender , Senior Facilitator.
There is substantial demand for trade finance. For an investment manager, however, the more compelling challenge lies in the operational journey between identifying that demand and deploying capital.
A transaction has to move through origination, assessment, structuring and execution before capital is deployed. And because trade finance assets are relatively short-dated, the work does not stop there. Transactions mature, capital returns and new assets need to be ready.
Keeping capital deployed
Ian Henderson, Chief Investment Officer at Alteia, sees several dimensions to growth: a strong track record for the investment manager, greater diversification, larger ticket sizes, expansion across jurisdictions and, eventually, multiple portfolios with different mandates. The investor platform has to evolve alongside that growth, allowing different forms of capital to be matched with different types of assets.
The short duration of trade finance creates an ongoing requirement for asset replacement. Existing transactions mature while new ones are being originated, so the pipeline has to support both replacement and additional deployment. Trade finance is also documentation-heavy, requiring experience in managing documentary flows alongside payment flows as transaction volumes increase.
In Henderson’s words:
“The entire asset origination and management ‘machine’ needs to scale.”
That machine includes originators and portfolio managers, credit and risk analysts, middle office and trade operations, legal, finance and compliance. As the strategy grows, the transactions themselves can change too: larger receivables and payables exposures, more structured or secured facilities, new jurisdictions and, eventually, separate portfolios with different mandates.
Timing is part of the equation. Assets can be originated and primed for funding before new capital arrives, while investor inflows can be staggered to match the availability of suitable opportunities. This helps manage cash drag and reduces the pressure to deploy capital simply because it is available. Cost of capital matters too. The return required from an asset has to make sense relative to the cost and characteristics of the capital funding it.
Keeping capital deployed therefore requires coordination between what is being originated and the capital available to fund it. For short-duration assets, that coordination is continuous.
What becomes repeatable
The third transaction with a borrower should look different from the first.
Eran Singh, Portfolio Manager, sees this in the practicalities of execution. Repeat borrowers generally know what information is required and prepare draw requests more effectively. The investment team knows the borrower better too, which makes it easier to anticipate issues that could otherwise delay a transaction. Where performance has been strong, that history can support higher advance rates, longer tenors and the financing of associated costs such as logistics and warehousing.
The wider transaction ecosystem matters, too. Suppliers, off-takers, carriers and collateral managers that have already been approved create greater familiarity around the trade. A change in supplier, deterioration in an off-taker’s creditworthiness, a different collateral manager or new customs regulation can alter that assessment. Abnormal conditions can also trigger more frequent review.
Geography adds another dimension. A borrower operating across several countries may initially be financed in the geography where the risk is best understood, with the relationship expanding into other markets as experience and comfort develop.
Facility design can make recurring activity easier to accommodate. Jessie-Marc Musungayi, Junior Portfolio Manager, points to revolving facilities that allow multiple transactions to be drawn, repaid and redrawn within an agreed overall limit. They can accommodate different commodities, seasonal variations and increasing volumes without requiring an entirely new structure for each trade.
For Jessie-Marc, predictability and transparency in the underlying trade cycle are particularly important. Stable suppliers and off-takers, established shipping routes, consistent timing and strong counterparties make future financing requirements easier to understand and support.
Tshepiso Gower, Portfolio Manager, describes the broader approach as a standardised core framework with selective bespoke additions. Credit criteria, documentation, collateral requirements and pricing parameters can provide a common foundation, while commodity, counterparty, jurisdictional or structural features can be tailored where required.
“Standardisation enables speed, while bespoke elements preserve flexibility and risk discipline”, she says.
Expertise can also build around particular jurisdictions, commodities and similar transaction clusters. As a borrower demonstrates consistent performance and a clear, validated growth path, the financing relationship can develop with it, including adjustments to quantum and pricing in line with demand and utilisation.
When more transactions change the view of risk
At transaction level, the questions are immediate. Is the structure appropriate for the risks involved? Can the client repay if something goes wrong with the trade? Who ultimately pays, on what terms and how reliable is that source of repayment?
Nkateko Maimane, Investment Analyst, sees those questions extending as the portfolio grows. Country, commodity, client and buyer concentrations become increasingly important, because apparently separate transactions can still depend on common underlying exposures. Different borrowers may rely on the same buyer, commodity or trade corridor, allowing a single disruption to affect several positions at once.
Katlego Dunjana points to jurisdiction, commodity, legal enforceability and collateral as characteristics that can differentiate transactions even where the structures look similar. Standard terms can create efficiency, while individual risks continue to require transaction-specific consideration. Higher volumes can also create capacity constraints of their own, requiring processes and resources to develop with the business.
Nozipho Zulu observes greater volume creating opportunities for diversification across borrowers, countries, commodities and trade corridors. A larger information base also supports comparison and trend identification. Regular portfolio monitoring then becomes important in identifying where concentrations are beginning to develop.
Similar transactions can still involve very different borrowers. Ownership structures, management capabilities, business models and financial performance continue to shape the assessment even where the financing structure itself is familiar.
What higher volumes look like in operations
Some of the clearest constraints appear in the mechanics of getting a transaction funded.
Kirsten Hardie and Trudy Govender, both Senior Facilitators, describe a drawdown process that can involve checking the relevant documents, obtaining middle-office approval, confirming that facility and loan-to-value limits are respected, loading the payment at the bank and booking the trade onto the loan management system.
The broad sequence may be familiar, but what happens inside it depends on the facility.
Stock financing can require collateral-management checks and release orders linked to physical inventory. Post-shipment financing follows a different flow. When an off-taker pays gross proceeds, the repayment may need to be allocated between settlement of the fund’s position and the borrower’s margin.
Drawdowns, repayments and collateral management remain highly hands-on today. Repeat borrowers generally become better at submitting the required documentation, which helps execution. With the right systems and technology, more of the transaction process can be automated, provided the necessary human intervention, checks and controls remain built into it.
Legal execution has its own version of accumulated experience. Donovan Lindhorst, Angela Paschalides and Abby Grabe point to the familiarity that develops with a borrower’s documentation, deal flows, counterparties and the legal and regulatory framework of a jurisdiction. That familiarity can make approval and execution more streamlined over time, alongside an awareness of the complacency that can develop with repeat transactions.
The infrastructure available in each market also matters. In some African jurisdictions, perfection and stamping of security documents still require physical documentation. Other markets increasingly use electronic registration and collateral registries.
A transaction can therefore move through a sophisticated digital investment platform and still encounter a physical process at a critical point in its execution.
Building capacity before the volume arrives
For Vince Freemantle, Chief Operating Officer at Alteia, preparing for higher volumes begins before the transactions arrive. Procedures, client and risk analysis, systems and technology, compliance, risk management and people need to be ready for the activity they are expected to support.
Technology can increase processing speed and accuracy, create additional checkpoints and improve oversight. It can also capture processes and institutional knowledge that might otherwise remain with individual people. The objective is to use technology where it adds efficiency while preserving the human judgement required across risk management and execution.
The organisation changes as the business develops too. A stronger track record can bring more opportunities into the origination pipeline, while the management of the existing portfolio takes on greater weight. Capacity has to develop across both.
Freemantle offers a practical test:
“If the deals can double without having to double the human workforce, while not diluting the quality of interaction with clients or increasing the risk of loss through the additional transactions taken onto book, then it’s working.”
That puts the emphasis in a useful place. Higher volumes ultimately have to work through the platform in practice: through the people processing drawdowns, the systems recording them, the teams assessing risk and the infrastructure supporting execution.
Scaling with discipline
So, when an institutional allocator asks, “Can you handle USD 1BN as safely and efficiently as you handle USD 200M?” a confident answer carries limited weight on its own. It has to be demonstrated through the structure behind it.
At Alteia, that means developing an institutional architecture capable of supporting greater volumes of capital across disciplined, repeatable and revolving credit streams. The question then becomes increasingly practical: which parts of the investment process can be systematised by technology, and where does human expertise continue to matter most?
The answer will differ across origination, underwriting, documentation, collateral, execution and portfolio oversight. Some parts of the process can become faster and more standardised. Others still depend on people understanding the transaction, the counterparties and the risks around it.
That is ultimately what scaling trade finance requires. Not simply more capital, or more transactions, but enough capacity between the two to keep the investment process moving without weakening the standards applied to each deployment.
For Alteia, that means continuing to build the people, processes, technology and institutional knowledge needed to put more capital to work while maintaining the discipline and oversight that underpin every transaction.
About Alteia
Alteia is a specialist investment manager focused on short-term, self-liquidating trade finance across Africa and the GCC. The group deploys secured and Shariah-compliant credit solutions through fund entities managed by Alteia Fund Management Limited, a Mauritius-licensed and regulated investment management company, and through Alteia Capital, a Saudi CMA-licensed investment firm, under a disciplined governance framework.
Further information
If you would like to continue the conversation or learn more about Alteia’s approach to trade finance, you are welcome to connect with us on LinkedIn or reach out to the team at contact@alteiafund.com or infoksa@alteiafund.com.
Any discussion is informational in nature and subject to applicable regulatory and compliance considerations.
