Flexport Capital, the trade finance arm of third-party logistics provider Flexport, announced Thursday it has secured a $200 million credit facility from insurance accounts managed by global investment firm KKR to support continued geographic expansion and development of more financial products.
Flexport’s suite of financial services provides importers and exporters with access to working capital for inventory and logistics expenses. Suppliers often require upfront payment for goods that can be stuck on the water and land terminals for months before they can be sold to generate cash.
Flexport said demand for trade finance is high now with many businesses sitting on too much inventory and struggling to pay vendors because of rising supply chain costs. An in-house financing line also provides a liquidity option for shippers as the economy slows and lenders tighten access to credit.
The KKR (NYSE: KKR) credit facility is the first external funding for Flexport Capital since its inception in 2017. Flexport has financed over $1 billion in invoices for more than 500 cargo owners in more than 20 countries, with nearly 150% year-over-year growth in its portfolio size. This year it has expanded its loan offerings to customers in five new regions: Canada, U.K., Netherlands, Belgium and Luxembourg.
As a digital freight forwarder, Flexport’s core strength is automating international trade processes and sharing data in a central platform. Flexport Capital gives customers flexibility over traditional lenders because it has deep insight in their business models, purchase order data and shipment data down to the product level. That data helps Flexport make decisions on when to extend credit and to offer more flexible terms. Flexport also offers customizable repayment terms.
“Flexport Capital began from the belief that a company’s supply chain should be a core competitive advantage and growth enabler, not a working capital impediment,” said Justin Sherlock, head of Flexport Capita, in the announcement. “With deeper visibility into overall supply chain health, we can help businesses of all sizes — and their partners — to remove liquidity constraints in the midst of uncertainty. I’m thrilled to have KKR providing a credit facility to help us execute our vision to make global trade easy for everyone.”
The KKR financing is one of the first major moves Flexport has made since former top Amazon executive Dave Clark joined the company as co-CEO on Sept. 1.