Greensill Capital
| Industry | Financial services |
|---|---|
| Founded | 2011 |
| Headquarters | London , United Kingdom |
Area served | Worldwide |
Key people | Lex Greensill |
Greensill Capital a financial services company based in the United Kingdom, focused on the provision of supply chain financing and related services. The company was founded in 2011 by Lex Greensill.
History and business model
Supply chain finance
Greensill primarily engages in supply chain finance, specifically in "reverse factoring", and derivative financial products. In traditional "factoring", a firm will sell the invoices it has issued to clients to a third party; the third party then collects the money owed from those clients.[1] In reverse factoring, a third party instead pays debts owed by a company to its suppliers at a slight discount, but much more quickly than the original company would have. The third party later receives payment from the company.[1]
Though banks have typically conducted supply chain financing,[2][3] regulation and capital restrictions targeting them have made such loans less profitable. This regulatory trend has in part led to the emergence of Greensill, and other, similar firms, such as Stenn International, as they do not face the same level of regulatory scrutiny.[3] Those in favor of reverse factoring say that it benefits suppliers, as it settles their debts more quickly. Those critical of the practice generally oppose it as it can allow companies to obscure debts.[4]
History
The firm was founded in 2011, with an initial focus on supply-chain finance. The company has since diversified its revenue streams, offering conventional banking services through a German subsidiary, the offering of bonds based on debt it has purchased, and through funds managed with partner organizations including Credit Suisse.[5]
American private equity firm General Atlantic invested $250 million in Greensill in 2018.[5] In 2018 Greensill was subject to extended media coverage and a call from British City grandee Lord Myners for formal investigation of the company’s involvement in scandal at Anglo-Swiss asset manager GAM.
In early 2019, Softbank invested $800 million in the company through its Vision Fund.[6] Due to the Softbank investment, the firm delayed considering other fundraising options such as an initial public offering.[6] By late 2020, the firm had begun pursuing other investors, aiming to raise between $500 and $600 million and to subsequently complete an IPO within two years.[7] In order to achieve its goal, the company agreed with an order by its board to sell all four of its planes, which included a Gulfstream 650.[7] In late 2020, Greensill began a search for a new auditor after growing too large for the firm's current auditor, Saffery Champness.[8] KPMG, Deloitte, members of the Big Four, and smaller accounting firm BDO all declined to become Greensill's new auditor.[8]
References
- ^ a b Scaggs, Alexandra (20 December 2019). "What Is Reverse Factoring? A Report Highlights a Problematic, Fast-Growing Financing Technique". www.barrons.com. Barron's. Retrieved 4 January 2021.
- ^ Bryant, Chris (15 May 2019). "SoftBank Invests in an Opaque $100 Billion Industry". Bloomberg.com. Bloomberg. Retrieved 4 January 2021.
- ^ a b Monga, Vipal (25 July 2018). "How Investors Make Money When Companies Take Longer to Pay Their Bills". Wall Street Journal. Wall Street Journal. Retrieved 4 January 2021.
- ^ Smith, Robert; Pooler, Michael (20 August 2020). ""System generated truncations": Greensill, Gupta and the hunt for the mystery holding company". The Financial Times. The Financial Times. Retrieved 9 January 2021.
- ^ a b Gottfried, Miriam (16 July 2018). "General Atlantic Invests $250 Million in Lending Startup Greensill". Wall Street Journal. Wall Street Journal.
- ^ a b David, Ruth (13 May 2019). "SoftBank Makes $800 Million Bet on U.K Financier Greensill". Bloomberg.com. Bloomberg. Retrieved 5 January 2021.
- ^ a b Mavin, Julie Steinberg and Duncan (2 November 2020). "SoftBank-Backed Startup Had a Fleet of Corporate Planes. Not For Much Longer". Wall Street Journal. Wall Street Journal. Retrieved 5 January 2021.
- ^ a b Kinder, Tabby; Smith, Robert; Massoudi, Arash (29 October 2020). "Greensill Capital rebuffed in search for new auditor". www.ft.com. The Financial Times. Retrieved 11 January 2021.