Singapore-based iLex, which aims to transform the corporate lending market, announced that it has raised an undisclosed amount of seed funding from strategic investors in France, Hong Kong, Singapore, and the US.
The startup, which was launched just last year, wants to create an end-to-end digital trading platform for primary syndicated loans and secondary loans. To do this, it plans to create a data analytics tool to help participants make informed credit decisions. As transactions increasingly go online, it also aims to automate deal workflows and offer secure online trading and communications.
The market participants it currently supports include banks, private debt funds, pension funds, asset managers, life insurers, hedge funds, and sovereign wealth funds, among others.
The new funds, ILex said, will be used to develop the first version of its platform, which will feature its own AI matching engine, trading protocols, and data analytics tool.
What problem is it solving? While digitization has already occurred for some asset classes like equities and foreign exchanges, the corporate loan market still largely relies on inefficient manual processes, iLex CEO and founder Bertrand Billon said.
According to the company, the pain points in the market are evident: constrained market reach due to limited resources, lack of liquidity in secondary lending, low-level price discovery, limited market data, and compliance and operational risks.
To tackle these issues, the startup’s digital solutions will help users access global deals through its AI matching system, the company said in a statement. The firm will also automate trading execution – through productivity tools and a centralized audit trail – and will offer real-time data visualization as well as loan pricing and benchmarking mechanisms so users can gain deep market insights.
“I believe our difference lies in the technology that is driving our solutions and data offerings and, importantly, our strategic partnerships with industry players,” Billon said.
The company has so far formed partnerships with London-based information provider IHS Markit and financial data provider Refinitiv.
What’s the opportunity? In Asia Pacific, the primary syndicated loans market was worth around US$700 billon last year, while the secondary loans market was estimated at around US$50 billon, according to iLex.
Over the last five years, there have been 1,200 active lenders and over 12,000 borrowers in the region accessing capital through syndicated transactions.
But while corporate lending drives the overall economy, being the second-largest source of funding for businesses, less than 1% of fintech investments have gone into this sector, the company observed. ILex therefore positions itself as a pioneer in digitizing the industry.
What are its challenges? As with any other digital marketplace, iLex recognizes that it has to work hard to drive the adoption of its platform and increase deal flow and volumes.
To do this, it will focus on attracting and retaining sell-side arrangers and buy-side investors to become a “must-have” tool for market participants, the company said.