A disruptive supply chain finance vendor fifteen years later – who is Orbian?

Orbian was one of the first companies to really start the ball rolling with supply chain finance.  It was conceived and developed in the late 1990’s as a joint venture between SAP and Citibank and became independent a few years later.  Orbian’s sole focus is to provide a supply chain finance working capital solution for corporates.  Orbian’s SCF model was built to provide an agnostic funding model to large corporations and their suppliers, in essence eliminating the dependency on single bank funded programs.  Their stated objective is to create the lowest cost, greatest capacity and greatest security of liquidity upon which the buyer’s working capital goals can be achieved.

Orbian successfully launched the first proprietary U.S. Capital Markets funding program in 2004 through the Orbian Special Purpose Entity (SPE). Each Buyer program is funded through a separate Orbian SPE, which, in turn, fund themselves through the issuance of notes (cleared through DTCC or Euroclear) and sold to banks and investors. Suppliers are never exposed to individual funders. At the moment, the vast majority of funding comes from Banks or Corporates themselves buying Orbian notes at Libor plus.

So how are they doing 15 years later?   Orbian currently has around 35 programs running, including Fortune 1000 clients such as Autozone, General Mills, Osram (a division of Siemens), and Siemens. Orbian services more than 4,000 customers in 53 countries and 16 different currencies. Probably their biggest client is Siemens Financial Services.  Siemens enables their suppliers in China to access RMB financing.  There are two types of accounts a supplier can choose to sell his receivables:

1. Auto-Discount - Supplier elects up-front to automatically sell all Siemens approved payments (receivables) to Orbian at a pre-negotiated discount rate.

2. Manual-Discount- Supplier has the option to select which of the approved payments (receivables) it would like to sell to Orbian.

I have spoken to a few of their clients in the past and corporations have mentioned a few things they like about the model.

  • Corporates using SAP find standard processes given Orbian’s SAP roots.
  • Large buyers have mentioned the documentation and legal agreements for their suppliers are straightforward and there is a small effort to get started.
  • Fees are transparent

Can Orbian thrive?

Orbian is a regulated financial institution (BaFin, German financial regulator).  They use a very high degree of technology enablement to drive a significantly more efficient customer enrolment.

The model is interesting, in that it is the first supply chain finance program of its kind to use the capital markets for supply chain finance.  This solution is made possible by their technology  platform.  They enable finance independent from a corporates relationship banks if required.  It is another alternative to Prime Revenue and another alternative to bank funded programs.

All of Orbian's existing Buyers have been self-originated.  Orbian is funded by networks of banks and investors. Suppliers are never exposed to individual funders.  It is a relatively small vendor, so much of the onboarding has to be done by the corporation initiating the program.

The fact that it has lasted 15 years shows value is created and they are sticky with their clients.  But to scale further with their agnostic funding model, we will have to hear more news.  So far, the visibility into case studies and success stories has been limited.

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