David Cameron-advised lender Greensill Capital on the brink of collapse
Lender advised by David Cameron on the brink of collapse: Crisis of confidence engulfs Greensill Capital
A controversial lender advised by former Prime Minister David Cameron is fighting for his survival after the departure of his main backers.
Although Greensill Capital was founded by Australian Lex Greensill and is based in the small town of Bundaberg in Queensland, its woes will reverberate in the UK where it has major operations.
The demise of the company is a serious embarrassment for Cameron who was hired as an advisor in 2018 and regularly promotes the lender, which operates in the world of supply chain finance.
The demise of Greensill Capital is a major embarrassment for Cameron (pictured) who was hired as an advisor in 2018 and who regularly promotes the lender
The crisis poses a threat to the British steel industry and the empire of Indian-born businessman Sanjeev Gupta, who is heavily dependent on Greensill for funding.
Gupta owns much of what remains of the UK industry through Liberty Steel, which is part of its GFG alliance.
Greensill’s problems escalated yesterday when Swiss asset manager GAM announced it would cut a £ 600million fund they manage together.
The move came just a day after another longtime ally, Credit Suisse, froze £ 7 billion in funds that invest in deals Greensill has struck. He is currently in talks with US private equity giant Apollo Global Management to arrange a bailout deal.
To add to the company’s problems, the British Business Bank this week deprived it of a government guarantee on its emergency loans to Gupta as part of the large-business interruption loan program against the coronavirus.
The guarantees meant that the taxpayer would have recouped 80 percent of the losses on these loans. But if Gupta doesn’t pay them back, the burden will now fall on Greensill.
German regulators are also on the alert. The country’s financial watchdog Bafin has appointed a special representative to oversee the day-to-day operations of Greensill Bank, which is part of the larger group and has lent heavily to Gupta.
Former investment banker Greensill, 44, started his business in 2011 after watching his parents struggle to make ends meet while they waited for their crops to grow on their farm in Australia.
It operates in the difficult and high-risk world of supply chain finance, lending to companies to pay suppliers. Initially, he appeared extremely successful and hired Cameron as a paid adviser two years after leaving Downing Street.
Former investment banker: Lex Greensill started his business in 2011 after watching his parents struggle to make ends meet while they waited for their crops to grow on their farm in Australia
Shortly after, in 2019, Japanese giant Softbank poured over £ 1 billion into the business.
At one point, the company appeared to be heading towards a valuation of £ 5 billion, but Softbank also appears to be losing confidence and is preparing to reduce the value of its stake to near zero.
It’s a hell of a turning point for the entrepreneur, who became a paper billionaire following Softbank’s investment.
GAM said yesterday’s decision to close the fund was due “to recent market developments and the resulting media coverage related to supply chain finance.”
Credit Suisse has decided to suspend its supply chain finance funds due to “considerable uncertainty” about their valuation.
Apollo is now said to be looking to select some of Greensill’s best assets. It is believed that the coins Apollo is interested in could only fetch £ 70million.
A spokesperson said: “Greensill confirms that he has entered a period of exclusivity with a leading global financial institution with a view to closing a transaction with them this week.
“The transaction is expected to include a large portion of Greensill’s business and its assets under management.
“While the structure of the new business is still being worked out, we anticipate that the transaction will ensure that the majority of Greensill’s clients will continue to be funded in the same way they are currently while preserving a substantial number. jobs. “