JPMorgan Chase JPM -0.71%
Tha & Co. makes a play for some Greensill Capital customers, according to people familiar with the deal, putting up an offer from Apollo Global Management Inc.
APO -3.56%
to buy a major start-up finance business.
The largest U.S.-funded bank works with Taulia Inc., a technology platform that was a major source of customers to Greensill. JPMorgan would provide $ 3.8 billion to fund contracts for former Greensill clients on the Taulia platform, the people said.
Other banks are expected to join the effort and provide more funding at a later date, the people said.
JPMorgan’s entry is on complex negotiations between Apollo, Greensill and its bankruptcy administrators, according to people familiar with the negotiations. The Apollo deal is now unlikely, the people said. Apollo had been in talks with Greensill to buy its core business for about $ 100 million, The Wall Street Journal reported last week.
Greensill filed for bankruptcy in the UK on Monday. The company went into crisis last week with the advent of Credit Suisse Group AG
CS 1.30%
a $ 10 billion freeze in investment money invested solely in Greensill’s supply chain loan, a kind of short-term corporate cash advancement. Without Credit Suisse money, Greensill would not be able to process new contracts.
Bloomberg News earlier reported that Apollo-Greensill talks have been suspended.
The emergence of other players to fill the Greensill gap will reduce fears that the startup collapse will go down through the supply chain financing industry. It also shows the willingness of lenders to find new business. Ultralow flat rates and a large amount of liquidity in the banking system took businesses through the Covid-19 pandemic.
Supply chain financing is a type of short-term lending traditionally provided by major banks such as JPMorgan and Citigroup Inc.
C. -1.70%
The loans, which help companies extend how long they have to pay suppliers, are usually for 60 or 120 days and need to be renewed regularly. It tends to be a low-margin business that benefits from economies of scale.
Greensill’s customers included a range of blue-chip companies and government agencies. He also relied heavily on a set of clients including companies affiliated with UK steelmaker Sanjeev Gupta and coal companies owned by West Virginia Gov. Jim Justice, the Journal has reported. Greensill lent to companies with its two largest outside investors, SoftBank Group Corp.
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, and private equity company General Atlantic.
Based in San Francisco, Taulia is an online business-to-business platform that connects companies to their suppliers. Providers can use the platform to sign up for early payment, to be paid out by the companies or by third-party financial institutions. He invites various financial institutions to offer funding for the contracts.
Many Greensill investment level customers approached it through Taulia, which maintains relationships directly with the end users. Greensill did not have much technology of its own, according to people familiar with its operations, and used Taulia to process contracts for many of its clients.
JPMorgan began working as a funder on the Taulia platform last year, before investing equity investments in the company with others valued at approximately $ 400 million. Taulia had a special funding arrangement with Greensill before releasing it in late 2019, the Journal reported.
The new $ 3.8 billion JPMorgan-Taulia funding package would start within days and would be a stop measure for Greensill customers, the people said.
Apollo planned to use its insurance affiliate, Athene Holding Limited.
, to provide the capital needed to take over Greensill’s supply chain loan buyers. They planned to expand about $ 7 billion in lending capacity.
Write to Julie Steinberg at [email protected] and Duncan Mavin at [email protected]
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