MTS takes controlling stake in blockchain-based fintech

Russia’s MTS Group has taken a 51% stake in blockchain-based trade-finance platform, Factorin, as it looks to enhance B2B services for corporate clients.

According to local reports, MTS paid RUB 867 million (US$11.7 million) including a RUB 350 million cash-in investment to support the start-up’s continued development. Of the remaining shares, parent company Digital Horizon retains 25%, with Factorin staff holding the balance.

MTS has a call option to buy the remaining shares in future.

Ilya Filatov, VP for financial services at MTS and MTS Bank CEO, commented: “This deal is yet another major step forward in the development of digital products and enhanced services for our B2B customers. Factorin is not only a fast-growing and high-tech trade finance platform, it provides a unique offering that fully leverages all of the advantages of blockchain technology. I am confident that the addition of Factorin into MTS Group will accelerate our growth and further reinforce the company’s leading position.”

Factorin is the developer and owner of a blockchain-based platform for trade finance transactions with a focus on supply chain finance and invoice factoring. Its website states that between January 2018 and May 2021, the start-up grew from an idea to a firm with a total transactional turnover exceeding $2.5 billion. The platform is used by 41 banks and companies in Russia.

At MTS Bank, clients can already leverage trade-finance services, however, local reports have said Factorin “might be integrated into this ecosystem in the future”.

Co-founder and CEO, Andrei Maklin, said: “Factorin is leveraging the latest innovations to not only offer our customers a full spectrum of advanced trade financing solutions, but also launch fundamentally new products that would be impossible to build using traditional technologies. For example, we are enabling corporate clients to set up their own platforms that provide their suppliers and buyers with attractive offers from a variety of financing providers.

“In just two years — with the support of Digital Horizon — we have built the largest trade finance platform in Russia. With this deal, we are adding the resources of a powerful partner in order to help meet growing market demand as well as unlock additional opportunities and competitive advantages for our users. Combining MTS’s scale and expertise with Factorin’s blockchain solutions will help us qualitatively transform fintech services for the Russian B2B segment.”

Alan Vaksman, co-founder and managing partner at Digital Horizon, added: “The financial infrastructure of the future will be powered by blockchain-based solutions. In the coming years, distributed ledger technologies will provide the secure rails to advance trade finance, settlements, custody, and payments in general.

“Factorin is one of the pioneers that are helping to bring that future into today’s business. Factorin’s blockchain technology solves real business problems, while processing millions of transactions in a highly secure and confidentiality-focused environment. I am pleased that MTS shares this vision with us and embarked on the strategic journey to support the rapid growth of this asset.”

The news broke on the same day Thailand’s Jasmine Telecom Systems revealed plans to become the largest miner of DLT-based cryptocurrency bitcoin, in the ASEAN region, by 2024.