SoftBank-Backed Greensill Capital Files for U.K. Insolvency
Posted on 03/08/2021
Greensill Capital has filed for administration, appearing before a U.K. court saying the company has fallen into “severe financial distress” and that it can no longer pay its debts. Greensill Capital is a supply chain finance business. In recent times, Credit Suisse suspended US$ 10 billion of funds linked to Greensill and GAM Holdings closed its US$ 842 million GAM Greensill supply chain finance fund. These moves cut Greensill off from access to investor capital.
In 2019, Greensill Capital was backed by the SoftBank Vision Fund, a fund managed by Softbank Group Corporation.
One of Greensill Capital’s large clients was British steel tycoon Sanjeev Gupta’s GFG Alliance (Gupta Family Group Alliance). The BBC once hailed Gupta as “The Saviour of British Steel”. Gupta’s network of companies is “currently experiencing financial difficulties,” according to Greensill’s court filing for insolvency. Greensill has around US$ 5 billion of exposure to GFG Alliance and Gupta’s companies have already started to default on Greensill. GFG told Greensill it would be insolvent without funding from Greensill. Unions have since raised concerns over the security of 35,000 jobs across Gupta’s businesses. The British government is in constant contact with Gupta’s steel division. Greensill Management had defaulted on a US$ 140 million loan from Credit Suisse (the original loan was US$ 160 million).
Grant Thornton is acting as administrator for Greensill Capital.
The bits and pieces of Greensill, excluding the exposure to Gupta’s companies, is reported to likely be sold to Apollo Global Management and its life insurance unit Athene Holding Ltd. Apollo has only offered US$ 59.5 million for Greensill Capital’s intellectual property and IT systems.
After the insolvency by Greensill, GFG Alliance has hired PJT Partners Inc. and Alvarez & Marsal Inc. as advisers to help it secure its financial future. Sanjeev Gupta hired Norton Rose Fulbright as a legal adviser.
2016 Warnings
Interestingly, bankers in Credit Suisse’s commodity trade-finance unit blacklisted Sanjeev Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate. The bankers in the commodity trade unit discovered in 2018 that Credit Suisse was lending to Gupta’s companies through a suite of investment funds, which eventually grew to US$ 10 billion. These bankers flagged their bosses and the division that housed the loans.
Keywords: Credit Suisse Group AG.