DBS Bank and Halcyon Agri entered a deal to launch HeveaConnect, a digital marketplace to trade sustainably processed natural rubber, the two said in a filing to SGX before the market open on Monday.
HeveaConnect will connect natural-rubber industry stakeholders, such as farmers, rubber producers and tyre makers, allowing them to track pricing and supply information as well as transact directly, promoting price transparency, the filing said. The platform will also offer other services, such as financing, insurance and logistics, it said.
“As the world’s leading integrated natural rubber player, Halcyon has the supply and customer networks in place to provide the scale needed to help transition the global natural rubber industry, which is currently heavily reliant on traditional paper-based processes, into a unified digital marketplace,” the statement said.
The platform will also exclusively handle the sale of HEVEAPRO-sustainably certified TSR to the global tyre industry, which uses around 75 percent of natural rubber globally, it said. HeveaConnect will also only transact HEVEAPRO rubber to encourage sustainable practices in the industry, it said.
HeveaConnect is expected to improve traceability of sourcing, which has been a challenge due to a fragmented supplier base of millions of farmers, it said. Traceability will allow buyers to see if the rubber has been grown responsibly, it said.
DBS will bring experience in digitization as well as being able to offer services including working capital financing, trade and commodity financing for buyers, financing to small-holder rubber producers who may not have access to banking facilities, it said.
Under the deal, DBS will take a minority stake in HeveaConnect of 27,470 new shares representing 9.9 percent of its issued share capital for US$1 million, the filing said. DBS will also have the option to subscribe for another 60,350 shares, or a 17.86 percent stake, for US$2 million by 31 December 2019, it said.
Robert Meyer, executive director and CEO of Halcyon, said that the platform fit into its digitization strategy for the rubber industry.
“Halcyon is first adopter as a natural rubber producer and we are also in discussion with our tyre customers to come onboard,” Meyer said in the statement.
HeveaConnect is expected to launch globally in the first quarter of 2019, it said.