Halcyon Agri sets up online rubber trading platform with DBS taking minority stake

SINGAPORE - Rubber producer Halcyon Agri Corporation said on Monday (Dec 17) that it has set up a digital marketplace for the trading of sustainably processed natural rubber, with DBS Bank taking a 9.9 per cent stake in this platform for US$1 million (S$1.38 million).

The HeveaConnect digital marketplace is meant to connect natural rubber stakeholders, such as farmers, rubber producers and tyre manufacturers, via a one-stop shop for participants in the natural rubber supply chain. With this platform, natural rubber producers and consumers are able to track pricing and supply information and transact directly, promoting greater price transparency in the industry, Halcyon Agri and DBS said in a joint press statement.

HeveaConnect will also be the exclusive platform for the sale of Halycon's range of sustainably processed rubber, known as HeveaPro-certified TSR (Technically Specified Rubber). This HeveaPro-sustainably certified TSR is supplied to the global tyre industry, which consumes about 75 per cent of the world's natural rubber.

The platform can also include access to services such as financing, insurance and logistics.

DBS can raise its stake in HeveaConnect by a further 17.86 per cent - calculated on a fully diluted basis - by exercising an option to subscribe to another 60,350 ordinary shares in HeveaConnect for US$2 million (S$2.75 million), a regulatory filing showed. This option can be exercised by DBS within three months from the long-stop date of Sept 30, 2019. The long-stop date may also be extended to Dec 31, 2019.

DBS said that the investment is part of the bank's commitment towards supporting sustainable business practices.

Mr Robert Meyer, chief executive officer of Halcyon, said in the press statement that DBS' digital strategy and approach to financing fits with the firm's digitalisation strategy to "make a difference in the natural rubber industry".

"HeveaConnect will not only be able to promote greater price transparency in the natural rubber market, but will also serve as an all-inclusive platform for farmers, producers, tyre manufacturers, as well as facilitators such as financial institutions, logistics and warehousing suppliers. Halcyon is first adopter as a natural rubber producer and we are also in discussion with our tyre customers to come on board."

Halcyon said it has the supply and customer networks in place to provide the scale needed to help transition the global natural rubber industry, which is heavily reliant on traditional paper-based processes, into a unified digital marketplace.

Shares of Halcyon Agri last traded at $0.40.