April 11, 2021

Greensill Capital is reportedly preparing to file for insolvency

SoftBank Group founder, chairman and CEO Masayoshi Son announces his group’s earnings results on May 9, 2019, in Tokyo.

Alessandro Di Ciommo | NurPhoto | Getty Images

Greensill Capital is preparing to file for insolvency in the U.K., according to a report from The Financial Times on Wednesday, citing sources familiar with the matter.

The insolvency filing will reportedly allow private equity firm Apollo Global Management to acquire parts of the business out of administration.

Greensill, which employs former U.K. Prime Minister David Cameron as an advisor, did not immediately respond to a CNBC request for comment. But a spokesperson told The Guardian newspaper that there has been an ongoing regulatory audit of the bank since the fall.

“This regulatory audit report has specifically not revealed any malfeasance at the bank,” they said. “We have constructive ongoing dialog with all regulators in all jurisdictions where we operate.”

Greensill provides working capital finance to businesses and individuals worldwide. It claims on its website that it “unlocks finance so the world can put it to work” and in 2020, it issued over $143 billion in finance to over 10 million customers.

The company’s main financial product is known as supply chain finance, which allows businesses to borrow money to pay their bills. However, critics argue that it can be used to disguise mounting debts.

Greensill was seeking a rescue deal with new and existing backers after Credit Suisse and GAM Holdings announced they were shutting down funds linked to the company because they were concerned about its true value.

Credit Suisse suspended $10 billion of funds linked to Greensill on Monday and GAM Holdings said on Tuesday that it was closing its $842 million GAM Greensill supply chain finance fund. The moves cut off Greensill’s access to capital.

A Greensill spokesperson reportedly told The Guardian that it had entered “a period of exclusivity with a leading global financial institution” and that it plans to conclude a transaction this week.

“The transaction is expected to include large parts of Greensill’s business and its assets under management,” they said. “While the structure of the new business is still being determined, we expect the transaction will ensure the majority of Greensill clients will continue to be funded in the same way as they currently are while also preserving a substantial number of jobs.”

Greensill was backed by SoftBank’s Vision Fund with $1.5 billion in 2019. SoftBank’s stake is reportedly at risk of being completely wiped out.

Greensill is based in London but its parent company is headquartered in the Australian city of Bundaberg, which is the hometown of founder Lex Greensill, who used to work in supply chain financing at Morgan Stanley and Citibank. He and his brother Peter have reportedly made billions from the venture and they’re fighting to ensure it survives this crisis by seeking relief from insolvency laws in Australia.

Greensill’s subsidiary in Germany has been put under the oversight of financial watchdog BaFin, according to a separate report from the FT on Tuesday. BaFin did not immediately respond to a CNBC request for comment.

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