Credit Suisse secures $ 10 billion in Greensill-linked investment backed by SoftBank

The bank said part of the money was “currently uncertain about the correct valuation.” The Wall Street Journal reported Sunday that the bank was concerned about the appearance of Greensill to one client, UK-based steelmaker Sanjeev Gupta, according to people familiar with the matter.

Greensill is an old Citigroup idea based in the UK Inc.

and Lex Greensill, treasurer of Morgan Stanley. Founded in 2011, Greensill specializes in an area known as supply chain finance, a type of short-term cash flow that allows companies to extend the length of time they have to pay their bills. out.

His main financial backer is Japanese tech conglomerate SoftBank and he counts former UK Prime Minister David Cameron as an adviser. Greensill has a bank in Germany and enters into contracts that are closer to traditional merchant banking services, such as lending to large investment projects.

Mr. Gupta was a former Greensill shareholder and Greensill has funded Mr. Gupta’s group of companies GFG Alliance, which, in recent years, has created a metal empire by acquiring failed steel mills and other troubled industries.

Last week, an application by one of Mr Gupta’s companies to acquire Thyssenkrupp’s steel plant in Germany AG

failed after the company ended negotiations on a contract.

German banking regulator BaFin last year began to confirm links between Mr Gupta’s businesses and Greensill’s German banking unit, according to someone familiar with the probe. A report from Scope Ratings in 2019 said about two-thirds of the bank’s loan book was related to Mr Gupta’s businesses.

In October last year, a Greensill spokesman said the company had regular communication with German regulators, and that the bank’s exposure to Mr Gupta’s companies was significantly lower at that time than at the time. the report was published.

Speakers from Greensill, Mr Gupta and SoftBank did not immediately respond to requests for comment.

In supply chain finance, Greensill competes with traditional banks such as Citigroup and JPMorgan Chase & Co. for investment rate messengers. Some Greensill blue-chip clients include AstraZeneca PLC and Ford Motor Co. Greensill has also expanded funding to lesser-known companies, including small start-ups and companies considered to be higher risk lenders.

Credit Suisse has been a stable provider of investment capital to Greensill through all four funds. Sold to pensions, corporate financiers and wealthy families, the fund invests in securities created by Greensill that fill the short-term financing needs of hundreds of companies.

Credit Suisse’s move to cut off Greensill’s money comes at a challenging time to raise its finances. Greensill had planned to expand $ 173 billion in funding last year, according to a show watched by the Magazine, but eventually provided $ 143 billion, flat from the previous year. Several Greensill clients hit financial problems last year, while companies they were affiliated with were forged connections.

Greensill has recently been trying to raise up to $ 1 billion in new capital. That process was originally expected to be completed in early January, but has stalled while the company tries to address the issues surrounding Gupta ‘s exposure, according to people familiar with it. on fundraising.

It is unclear what percentage of Credit Suisse’s funds are currently open to Mr. Gupta’s companies. In January, its companies were not clearly named in the top 10 recipients of funding in the largest fund of Credit Suisse-Greensill, which has $ 7.3 billion in assets, according to a document viewed by the Journal.

Write to Julie Steinberg at [email protected] and Duncan Mavin at [email protected]