In December 2018, DBS Bank partnered with Halcyon Agri Corp. to launch HeveaConnect, a digital trading platform for sustainable rubber. As part of the deal, DBS took a minority stake in the platform, and soon after, Japanese trading giant Itochu Corp. joined DBS as a joint venture partner in the project.
HeveaConnect has agreed to a share placement of ordinary shares for Itochu. Share subscription and principal terms are currently being finalized, and will be announced when the process is complete.
Expected to launch globally in the first quarter of this year, HeveaConnect is an initial move toward more sustainable rubber practices. The platform aims to be a one-stop location, connecting natural rubber farmers, rubber producers, and tire manufacturers in an integrated ecosystem. HeveaConnect will also increase transparency in the sector, as consumers will be able to track prices and supply information, and conduct deals directly through the platform, which will also offer value-added services such as insurance, financing, and logistics.
“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 [sic] manufacturers, as well as facilitators such as financial institutions, logistics and warehousing suppliers,” said Robert Meyer, executive director and CEO, Halcyon. “Halcyon is first adopter as a natural rubber producer and we are also in discussion with our tyre [sic] customers to come onboard.”
HeveaConnect also will serve as the exclusive selling platform for Hevea-Pro TSR (Technically Specified Rubber), Halcyon’s line of sustainably processed rubber, which is supplied to the global tire industry and accounts for 75 percent of global natural rubber.
Coming together, the partnership is a complimentary one. Halcyon brings the supply and customer networks needed for commercial scale, as well as the volume to effectively transition the global natural rubber industry from one that is heavily dependent upon paper transactions to a unified digital marketplace. Meanwhile, DBS brings its expertise in digitization and innovative banking, and is well positioned to fill its role as the platform’s main banking partners, offering working capital financing, trade and commodity financing for buyers, and financing to smallholder farmers and producers who have had previously found gaining access to financing challenging.
“We are pleased to collaborate with DBS as our key banking partner for HeveaConnect. DBS’s successful digital strategy and approach to financing fits with our digitisation [sic] strategy to make a difference in the natural rubber industry,” said Meyer.
“As the bank with the world’s largest API platform in the banking industry, we continuously explore new ways to harness our digital capabilities to help our customers solve their business challenges,” said Raof Latiff, head of digital, institutional banking, DBS Bank. “By integrating our APIs to facilitate trade financing to both upstream and downstream rubber players through HeveaConnect, we are also able to deepen our understanding of our customers’ needs, allowing us to provide innovative advice to best position their businesses for a sustainable future. We are pleased to be part of Halcyon’s ambition to be the leading provider of sustainable natural rubber.”
Halcyon continues to further its work to increase sustainability, by incorporating HEVEAPRO, the intellectual property rights of its sustainable natural rubber processing standards, into the HeveaConnect platform, which will only transact HEAVEPRO rubber as a way to drive the industry toward a higher level of sustainability.
Under the HEVEAPRO mandate, standards are being expanded to include the tracking of sustainable practices in rubber plantations and smallholders’ plots, promoting responsible production practices, and higher traceability requirements for the act of sourcing natural rubber, which is currently compromised by a widely fragmented base of suppliers.
-Lynda Kiernan