We structure projects for clients and assist them in accessing finance via our correspondents and partners.
Shumba an entrepreneur with a registered company in Uganda has been importing cooking oil worth USD 15 000 from a company located in Malaysia over the past 3 years. Shumba has a supply contract with one of the wholesalers of cooking oil in Uganda. The entrepreneur contacted us to access finance for his business.
Albatross Fund team immediately began work on Shumba’s company by analyzing his business inside out structuring and most importantly addressing his funding needs. They studied his business, track record, tax records, supply and contract performance history with his Malaysian supplier. The team realized a common factor affecting his business growth – “working capital”. Shumba’s business success relied on cash in hand to pay the supplier, and government tax before delivery to the wholesaler who would pay him once product was delivered.
After weeks, Shumba’s company accessed finance for working capital. Albatross Fund team was able to structure a 1 year contract with the Malaysian supplier and ugandian wholesaler.Every 3 months his Malaysian supplier would deliver cooking oil worth USD 75 000 and Shumba would then pay for it within 90 days.
How did Shumbafrom Uganda accessa Letter of Credit of USD 75 000 from a Hong Kong Bank.
1. Shumba had been in a 3year business relationship with his supplier. Every 3 months,Mr Lim (Supplier of cooking oil) knew he would receive a call from Shumba in Uganda indicating that he had made payment of X amount into their company bank account.
2. Each time Shumba supplied his client (wholesaler in Uganda), he would be paid in cash within 21 days of product delivery.
3. Shumba tax records were inorder.
4. Shumba did not need a loan but Shumbawanted growth for his company but was constrained by cash to increase his volumes and increase his profit margin.Shumba dreamed of diversifying into importing sugar.
5. Albatross Fund structured Shumba’sbusiness which included analyzing his market, growth potential, analyzing investors risk and, negotiating with Shumba’s supplier to accepting LC as mode of payment.
6. Agreements were executed and a Letter of Credit worth USD 75 000 issued via Citi Bank Hong Kong was effected towards Mr Lim’s company in Malaysia for delivery of X quantity of cooking oil.
7. Shumba’s business was a legitimate business and was liquid enough to pay the closing cost of LC being advised towards Mr Lim (cooking oil supplier). The closing cost of accessing the Letter of Credit for Shumba was 10.5% of USD 75000.
8. Shumba’s business is growing. He now supplies 3 companies in Uganda, is waiting for his 3rd USD75000 shipment from Mr Lim,
The case study of Shumba is an example of many clients whom Albatross Fund has assisted. We can structure projects for companies and assist them in accessing working capital including but not limited to providing Proof of Funds – which normally assists companies to prove they have the funds they need in committing to a Tender.
For project structuring, upon full submission of project questionnaire, and executive summary, Albatross Fund will then engage with client during due diligence. Projects submitted will go through the Funding Process Flow guideline and once Investment committee provisionally approve to structure project, Client must then provide project then only can client must then supply a bank comfort letter to indicate readiness to pay closing cost after project has successfully been approved for Funding