Borrower Overview
TriLinc has provided financing to a global metals trader, established in 1992 that is engaged in the physical trade of metals, semi-finished steel and raw materials used throughout the steel manufacturing value chain. The financing for this borrower supports the trade of nickel from South Africa and Zimbabwe into the United Arab Emirates, the Netherlands, the United States and South Korea. The borrower’s parent company created a foundation to support local and national apprenticeship initiatives for youth in industrial communities to participate in technical courses and industry-related vocational training.
The company sources London Metal Exchange (“LME”) grade full plate nickel cathodes and briquettes, in addition to providing financing, logistics, and other related services to buyers and sellers of commodities. Global demand for both nickel and stainless steel products has grown at a rate of 5% annually from 2010 to 2015 which is correlated with increasing levels of economic infrastructure development worldwide.1
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Market Overview
Although the United Kingdom is a high-income country, an exception was made for this borrower’s high impact in Sub-Saharan Africa which meets TriLinc’s standards for its performance across relevant growth, stability, and access metrics.2 Sub-Saharan Africa GDP growth is projected to pick up to 4.2 percent in 2016, as commodity prices stabilize and supply constraints ease.3 Growth moderated in several mineral and metal exporters- including Mauritania, South Africa, and Zambia.4
Growth in the region is projected to strengthen to 4.7 percent in 2017-2018, on the back of firming commodity prices and a gradual improvement in the region’s largest economies of Angola, Nigeria, and South Africa.5 The borrower’s international trade activity throughout Sub-Saharan Africa, among other regions, plays a role in reducing the 2016 $1.5 trillion global trade finance gap.6 International trade helps facilitate export diversification, enhance global competitiveness, generate growth in countries’ economies and trade activities, strengthen ties between countries, and promote economic integration.7
Specifically related to the global nickel trade, China’s growth in demand has been instrumental and the country imports 45 percent of total nickel trade volume, with roughly 5.5 percent of demand being met by South Africa and Zimbabwe exports.8
Additional Sustainability and Impact Highlights
- Putting Employees first – the borrower reports that it offers health and dental insurance, life insurance, parental leave, retirement provisions, and stock ownership for their employees. They maintain fair policies for hiring and recruiting, career advancement, compensation, and sexual harassment prevention.
- Certification – LME grade metals fulfill an internationally recognized high standard quality and in order to be approved as an LME brand, producers must have an ISO 9001 Quality Management System certification.
1International Nickel Study Group – Production, Usage and Prices, 2016 2There is no assurance that our investment in this company or this market will be successful. 3World Bank Global Economic Prospects January 2016 4World Bank Global Economic Prospects January 2016 5World Bank Global Economic Prospects January 2016 6Asian Development Bank, $15 Trillion Trade Finance Gap Persists, 2017 7European Commission, 10 Benefits of Trade for Developing Countries, 2012 8The Observatory of Economic Complexity, Nickel Ore, 2016
The above information is as of the initial date of investment: April 25, 2016.
RISK FACTORS
There is no guarantee that TriLinc’s investment strategy will be successful. Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion. TriLinc selects investments and conducts operations on behalf of its clients, and will face conflicts of interest. Investment with TriLinc is not suitable for all investors. Securities Offered through CommonGood Securities, LLC, a member of FINRA and SIPC.
An investment with TriLinc carries significant fees and charges that will have an impact on investment returns. Information regarding the terms of the investment is available by contacting TriLinc. This is a speculative security and, as such, involves a high degree of risk. Investments are not bank guaranteed, not FDIC insured and may lose value or total value. Some investments may have been made in an investment vehicle that is no longer open for investment. The highlighted investment may or may not have been profitable. There is no guarantee that future investments will be similar.
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