Lex Greensill promoted his business as a financial future, speaking up better technology than Wall Street competitors that allowed him to lend at very low rates based on real-time information.
But former employees of Greensill Capital, as well as others familiar with its computer systems, paint a very different picture of the lender’s technological capabilities.
Instead of risk in his business being assessed through proprietary technology tactics, much of the work was done on spreadsheets or other basic programs. New projects were not always successful, and even near the end, the industry was scrambling to find a partner to fill the gap in its technical capabilities.
The company’s internal operations have been in the spotlight after falling this month, and the descriptions raise new questions about how it went from startup to tech unicorn to an estimated valuation of $ 7 billion at one time. Along the way, his Australian founder attracted investors such as SoftBank Group Corp., on former UK Prime Minister David Cameron as an advisor, and forged profitable ties with Credit Suisse Group AG.
This story is based on conversations with people who are involved with Greensill and know what he did, talked about an anonymous situation, as well as court filings and documents.
A prime example of Greensill hype was the reliance on tech partner Taulia Inc., which provided a platform to connect with companies using supply chain financing.
As Greensill went into liquidation, Taulia received funding from banks including JPMorgan Chase & Co., allowing service companies that had previously relied on Greensill to hold on. Sin killed plans by Athene Holdings Ltd with the support of Apollo to buy Greensill ‘s IT systems and intellectual property.
The fact that Athene walked away is a sign of Greensill’s low tech value. Even at the time of negotiation, Athene was willing to pay just $ 60 million.
According to one acquaintance of the company, there was a great moment as the crisis escalated. In the week before it collapsed, employees of the lender approached a fintech competitor, admitting that Greensill had little technology and asking if the competitor could be a service provider to the company. As a result of the fall of Greensill, these talks never took place. Greensill executives declined to comment for this story.
The Greensill Fallout
- Greensill Capital filed for bankruptcy
- Greensill Bank closure
- Credit suisse silver freeze tied to Greensill
- against money for money
- chief executive officer
- GFG Alliance hit money cròg
- SoftBank wrote a value of investment in Greensill
- Tokio Marine Holdings Inc., which wrote insurance for Greensill, is facing a larger-than-expected release
Greensill needed very little in terms of advanced software, especially supply chain finance, the industry he was heavily talking about. Financing invoices is a simple process, involving the purchase of a guarantee of future payment at a discount, so that you get the full payment later forward. The more complex technology was the interface between companies and asset providers, much of which was handled by partner Taulia Inc. and other third party providers.
The U.S. lawsuit sheds light on Greensill’s unconventional methods
But Greensill had another business called “future accounts receivables.”
He announced this offer in his early payment scheme for UK pharmacies, where he would extend unsecured loans to small chemists at ultra-low rates. Similar facilities were provided to Bluestone Resources Ltd., Softbank portfolio companies and, its largest client, GFG Sanjeev Gupta Federation.
What Greensill said he could do is look at past payments and, using complex algorithms, find out future receipts and borrow against sales that have not yet happened. While this is a more risky lending method, Greensill said the systems were well-rounded and could charge lower rates than might otherwise be offered. Many of these were sold on assets run by Credit Suisse.
Technical capabilities were one of the main reasons Greensill could compete with financial giants like Citigroup Inc. and HSBC Holdings Plc, he said.
But all Bloomberg News employees spoke out denying that he could have predicted future payments with certainty. Changes in the price of some of the goods sold, steel for example, made this almost impossible, some members of the public said.
Over the past year, they had put a lot of effort into replacing old technology, hiring London-based technology consultancy, Equal experts. But equal experts pulled out of the project early, sadly unable to come up with ideas freely without being fired down, people familiar with the matter said. Experts did not respond to requests for comment.
Greensill said he was “changing finances to change the world.” But even though he had made some progress in machine learning and AI, those efforts were still in their infancy> Much of the company was still running off basic spreadsheets even at the end.