SGX invests in 9.09% stake in HeveaConnect for US$1.5 mil

Halcyon Agri Corporation, on March 3, announced that Singapore Exchange (SGX) has invested US$1.5 million ($2.00 million) in HeveaConnect, a digital marketplace for sustainable natural rubber, for a 9.09% stake.

The investment was made through SGX’s wholly-owned subsidiary, Asian Gateway Investments.

HeveaConnect was incorporated on Aug 28, 2018, to digitalise the traditional natural rubber supply chain and fulfil the growing demand from consumers for sustainably sourced and responsibly produced rubber.

Since the launch of the platform in April 2019, HeveaConnect has matched over 250,000 metric tonnes of physical natural rubber for global tyre majors with gross sales value of over US$325 million.

“SGX’s investment into HeveaConnect will play an integral role to boost industry-wide adoption as market participants require an independent platform,” reads the statement.

In addition, Halcyon Agri has transferred 14.73% of its shares in HeveaConnect to HeveaConnect Equity Trust, which will be administered by an independent trustee.

The shares will be distributed to eligible organisations involved in promoting the sustainability agenda in the rubber industry.

With the completion of the transaction, Halcyon Agri will no longer be the controlling stakeholder in HeveaConnect, with a shareholding of 49.91%.

HeveaConnect’s other shareholders, ITOCHU and DBS’s shares will also stand at 17.27% and 9% respectively.

“Since the inception of HeveaConnect, both Halcyon and ITOCHU have been using the platform to market our products to some of our customers. With the ever-increasing emphasis on traceability and sustainability, which are driven by demands from the automakers – the customers of our customers, we aim to continue providing quality products, and excelling at the most stringent and rigorous requirements,” says Ng Eng Kiat, managing director of Halcyon’s global tyre sector platform.

On ensuring that the rubber traded on the marketplace is sustainably sourced, Gerald Tan, CEO of HeveaConnect, says, "We would start with a transparency framework where we focus on identifying the source locations and cross-referencing that with known ESG issues to access the risk. This is an evolving industry where we increase the data collected upstream and identify problem areas, look for appropriate extension services to ensure there is sufficient effort taken on the ground to improve the supply chain conditions. It is our aim to first show where the problems are and not exclude them but partner with suitable extension program providers to alleviate the situation."

"It is our aim to have a diversified ownership structure with active industry contribution and participation. HeveaConnect has always been conceived as a platform from the industry for the industry. We see a future where trades are moved from tedious manual processes to a platform where trades are negotiated efficiently, with straight through processing for all post trade processes and ideally to create a multi-lateral price discovery price discovery engine," adds Tan on where he sees the rubber industry in five years' time.

Shares in Halcyon Agri closed 1.5 cents higher or 5.7% up at 28 cents on March 3.