Supply@ME Capital PLC (LSE:SYME) shares jumped after the fintech said it StockCo arm has secured a binding commitment from an institutional investor to invest in its first inventory monetisation (IM) transaction.
The unnamed investor will use "traditional funding sources" to make this commitment, which will then be used by the StockCo to monetise up to €1.2mln of warehoused goods of an Italian IM client company, which operates in the tyre re-treading sector in different countries.
Earlier this year SYME said it plans to work with a consortium of European investors to fund IM transactions with a monetisable value of up to €5mln.
The company said the new transaction follows the recently approved Italian legislation 'pegno non possessorio' (PNP) and is expected to be the first such IM transaction implemented in the market under the regulation outside of agricultural inventory.
The tyre-retreading client has entered into a binding commitment with the StockCo to finalise the necessary definitive commercial agreements in relation to the transaction by the end of the week and, due to the seasonal nature of demand it faces, SYME said the value of the inventory monetised is expected to increase, with the StockCo retaining a right of first refusal on inventory monetisation of the next €10mln of eligible inventory.
Alessandro Zamboni, chief executive of SYME, said the first IM being backed by traditional financing was a "strategic pillar" of its business model and "will enable us to further build our track record in Italy and strengthen our proposition there and in other geographies".
"As each funding route comes online, we are breaking down remaining barriers to Supply@ME being recognised by potential funders, globally, as the unique access point to a novel and untapped real asset class, as opposed to old fashioned inventory financing deals which we continue to observe in the market."
He said the PNP regulation has "the potential to be a gamechanger, unlocking the potential in the Italian market wherein we have longstanding IM relationships with major banks and investors, and significant pipeline of prospective IM transactions".
Shares in SYME rose 26% to 0.06p in early trading, before easing off to 0.05p.