Crisis-hit Greensill expects to avoid insolvency and preserve the bulk of its existing supply chain finance (SCF) business, GTR can reveal, though the London-based fintech will shed business linked to Sanjeev Gupta’s GFG Alliance.
Greensill had been plunged into financial difficulty this week after Credit Suisse froze an investment fund that provided billions to the company, prompting speculation it was on the brink of collapse. That prospect appeared more likely on Tuesday when it emerged Greensill had sought insolvency protection in Australia.
But according to a statement issued on Tuesday, Greensill has now “entered a period of exclusivity with a leading global financial institution, with a view to concluding a transaction with them this week”.
The deal would involve the sale of Greensill’s operating business to Athene Holding Ltd, which is part-owned by private equity investor Apollo Global Management. The value of the transaction has not yet been disclosed.
GTR understands from a source close to the deal that although there will be a new owner of the company, and its higher-risk business linked to Gupta will be exited, more than 70% of its pre-existing SCF clients will remain on board.
The source adds that Greensill is “nowhere near insolvent” and has hundreds of millions of dollars in cash on hand.
Two separate sources say that if the deal goes through as anticipated, invoice payments to remaining clients can continue as usual.
The source close to the deal adds that Greensill’s existing product and pricing was considered attractive to the new buyer, and so is not expected to change. The Greensill statement adds that “a substantial number of jobs” should also be preserved.
Apollo Global Management did not comment when contacted.
GTR understands that Greensill has recently been in talks with lenders that participate in its SCF programmes, reassuring them that its “mainstream” SCF offering is structured so that it is decoupled from any broader risk to Greensill itself – for instance, through the use of trusts, paying agents and segregated accounts.
The business that will be exited relates instead to GFG Alliance, a loose group of companies owned by, or connected to, steel magnate Gupta.
BaFin, Germany’s financial services regulator, had raised concerns over Greensill’s business with GFG Alliance companies, fearing it had become overexposed to a single client. The regulator has since taken over day-to-day control of Greensill Bank, a German entity that is part of the wider group.
The source close to the deal says the Gupta-related business is not restricted to this German entity, and that GFG Alliance assets have been distributed elsewhere, but that it “is an issue for the bank” and further statements are likely to be issued in the coming days.
After Monday’s Credit Suisse announcement, GAM Investments – another Swiss asset manager – announced it would also freeze a Greensill SCF fund “as a result of recent market developments”.
GAM says the assets are fully insured against default, and there are “no concerns regarding the valuation of the assets in the fund”.
Meanwhile, SoftBank has written down its US$1.5bn holding in Greensill and is considering valuing it at close to zero, according to Bloomberg.