- Once high-flying financial firm Greensill Capital is preparing to file for insolvency, the Financial Times said.
- Its banking subsidiary in Germany is now under direct oversight of the country’s financial watchdog.
- HP board member Patricio Russo has resigned from the lender’s advisory board.
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SoftBank-backed Greensill Capital, the controversial lender advised by former UK Prime Minister David Cameron, is preparing to file for insolvency, according to the Financial Times.
The filing will make way for a $US100 ($128) million sale of its operating business to US private equity firm Apollo Global Management. The amount represents a fraction of Greensill’s peak valuation of $US4 ($5) billion.
The Apollo deal, which could be finalized by the end of the week, could wipe out stakes like SoftBank’s Vision Fund, which invested $US1.5 ($2) billion into the company in 2019, FT said. The $US100 ($128) billion tech fund has already significantly written down its stake in Greensill.
Greensill’s German banking subsidiary is now under direct oversight of the country’s financial watchdog, BaFin, the FT said.
The lender’s lawyers this week said its loss of $US4 ($5).6 billion of a credit insurance contract could lead to a wave of defaults and 50,000 job losses, FT reported. They said Greensill Bank would be “unable to provide further funding for working capital of Greensill’s clients,” some of whom were “likely to become insolvent, defaulting on their existing facilities.”
The group’s product is focused on supply-chain finance, a controversial form of a centuries-old technique of raising money from invoices. The process involves a financial institution agreeing to pay a company’s supply bill. In turn, its suppliers get paid quickly, but less than they are owed. The financial institution later collects the full invoice from the company for whom it helped extend the time to make its payments.
The Times reported on Wednesday HP board member Patricio Russo has resigned from Greensill’s advisory board over the growing crisis faced by the startup.
Greensill did not immediately respond to Insider’s request for comment.