Blackstone-backed tech company, Bitfury team up on trade finance project
NEW YORK (Reuters) – Mphasis Ltd, an Indian technology firm majority-owned by Blackstone Group LP, has teamed up with blockchain startup Bitfury to create either a digital token or a platform aimed at automating financial services such as payments in international trade transactions between countries, an Mphasis executive said.
Financial terms of the partnership were not disclosed.
Andres Ricaurte, senior vice president and global head of payments for Mphasis, told Reuters in a recent interview that both companies will seek to facilitate instant settlement of export and import transactions, reduce reliance on complex foreign exchange systems, and increase flexibility in liquidity management for financial institutions.
While there are projects trying to digitize other areas of international trade transactions such as document management and customer due diligence, the core financial services such as cross-border settlements and financing of transactions operate on “outdated and clunky” infrastructure, Ricaurte said.
The result is a complex gridlock that limits visibility for all parties and hinders access to liquidity for those who need it most. Those conditions have contributed to a global $1.5 trillion gap between the demand and supply of trade finance, Ricaurte said.
The collaboration with Bitfury will try to address this key weakness in the sector.
Bitfury, which has a valuation of about $1 billion, is one of the largest companies that develops blockchain solutions for various clients and governments. It raised $80 million recently from investors including the merchant bank founded by billionaire Mike Novogratz, a former macro hedge fund manager at Fortress Investment Group.
Blockchain, which first emerged as the system powering the digital currency bitcoin, is a shared database maintained by a network of computers connected to the internet.
Blackstone owns 52.3 percent of Mphasis, which currently trades on the National Stock Exchange of India.
“Our goal is to accelerate the disruption and transformation in the trade finance space,” Ricaurte said. “The exact end-goal – whether it’s a platform, a trade token, or a consortia is still to be figured out.”
He said the venture was not solely about creating a digital currency.
“It’s about creating a digital representation of the liquidity that’s trapped inside this supply chain and leveraging that representation to make trade transactions more seamless and transparent to everyone,” Ricaurte said.
Mphasis will use Bitfury’s Exonum blockchain platform to develop new technologies in the trade finance sector.
Bitfury Chief Executive Officer Valery Vavilov said in a statement the two companies “will create inter-operable systems” that will improve fragmented financial systems.
Reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Matthew Lewis