Greensill Capital: How the SoftBank-backed firm has ended up on the brink

Pressure is mounting on SoftBank-backed Greensill Capital after major backers signalled moves to halt trading in and out of the UK-based supply chain financier.

GAM, the Swiss asset manager, announced on 2 March it will close the $842m GAM Greensill Supply Chain Finance fund “as a result of recent market developments” and media coverage surrounding the embattled group.

The announcement comes a day after the fund management arm of Credit Suisse said it was freezing four private investment funds due to concerns over “considerable uncertainties with respect to their accurate valuation”, according to The Wall Street Journal. The bank also had concerns with Greensill’s significant exposure to a single client, UK-based steel magnate Sanjeev Gupta.

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GAM’s decision to close its supply chain finance fund ends a relationship with Greensill that goes back to 2016.

The relationship between the two firms came into sharp focus following the suspension of GAM’s star fund manager Tim Haywood, who was later sacked for gross misconduct.

FN previously reported how GAM’s management discovered in early 2018 that Haywood had entered into a 300m Australian dollar ($173m) “put” with Greensill several months after he had been told to wind down his clients’ exposure to the financing firm and stop doing deals with it, according to people familiar with the probe into Haywood’s conduct.

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But just who is Lex Greensill, the Australian financier who links giant Swiss financial services firms with former Prime Minister David Cameron?

The one-time farmer turned billionaire financier who flies on private jets and flits between New York, London and Sydney. Greensill, the eponymous business he launched eight years ago, says it has provided more than $50bn of financing to millions of businesses around the world, FN reported.

READ Who is Lex Greensill? The billionaire banker tied to GAM’s crisis

His firm has been noted for its “circuitous” deals from 2018 that involved Chinese telecoms companies ZTE and Huawei.

In July 2020, FN reported that Credit Suisse concluded a review into four funds it manages with Greensill that highlighted the often circular nature of the money flows in the funds. The review was sparked by concerns about the multiple roles held by Greensill’s major shareholder, SoftBank: The Japanese conglomerate was an investor in one of the funds, a shareholder in Greensill and a shareholder in several companies that received financing from the funds.

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The firm’s assets under management fell during June 2019, FN reported, as investors redeemed their holdings. The GAM-Greensill Supply Chain Finance fund was set up in 2016 and had more than €2bn in assets under management earlier that year.

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Later revelations revealed Gupta, the billionaire industrialist behind conglomerate GFG Alliance, was a shareholder in Greensill, the controversial supply chain finance company that sold hundreds of millions of dollars of GFG bonds to Swiss investment manager GAM.

READ Sanjeev Gupta’s Greensill stake shows complex links at centre of GAM crisis

The firm added a top Vodafone executive to its ranks, FN reported in June 2019. Neil Garrod, Vodafone’s group treasury director, has been with the firm for more than a decade. During his tenure, Vodafone became a key Greensill client and a major investor in the GAM-Greensill Supply Chain Finance Fund, which is managed jointly by Greensill and Swiss asset manager GAM.

READ Greensill hires Vodafone treasury director as CFO

Questions were also raised in October 2019when it emerged that Greensill deployed SoftBank’s investment into a 92-year-old bank based in Bremen. In May 2019, a press release touted its plans to “accelerate new technology” and expand into China, Brazil and India, FN reported.

READ  Greensill pours SoftBank’s ‘new tech’ money into 92-year-old bank

To contact the author of this story with feedback or news, email Penny Sukhraj