SoftBank’s Vision Fund is set to plough more money into Greensill Capital, the controversial UK finance company that counts former British prime minister David Cameron as an adviser, people close to the talks said.
The fresh funding from Vision Fund, which is managed by Japan’s SoftBank and run by a former senior Deutsche Bank debt trader, will be on top of the $800m it had already invested in the privately held company in May.
That deal lifted Greensill’s valuation to about $3.5bn, confirmed the status of its founder Lex Greensill as a paper billionaire and made the company one of the UK’s most valuable finance start-ups. Vision Fund is now planning to invest “a few hundred million” dollars more into Greensill, these people said.
SoftBank and Greensill declined to comment.
Greensill is a specialist in supply-chain finance, where businesses raise funding backed by supplier payments. Mr Greensill, a close friend of Mr Cameron who served as an adviser to his government, founded the company in 2011 after working at US investment banks Morgan Stanley and Citigroup.
The valuation at which the additional capital invested by Vision Fund will be made could not be ascertained. Following its first investment in Greensill, Vision Fund led a $200m round in C2FO, a US-based supply-chain finance business.
The investment in Greensill has been sourced and led by Colin Fan, an executive at Vision Fund who worked at Deutsche Bank with Rajeev Misra, who runs the fund. It is the latest UK-based financial services investment by Vision Fund, which was meant to focus on technology but whose portfolio also includes a stake in UK lender OakNorth Bank. The fund’s main backers are the governments of Saudi Arabia and Abu Dhabi.
To his supporters, Mr Greensill, who grew up on a farm in Australia, is an innovative financier helping businesses unlock cheap funding. Detractors point to his high tolerance for risk and use of complicated off-balance-sheet financing structures.
Esoteric bonds that Greensill masterminded were at the heart of last year’s high-profile governance scandal at Swiss fund manager GAM. The asset manager had to restrict investors withdrawing money from its flagship bond funds, due to their exposure to hard-to-sell Greensill debts backing the British steel tycoon Sanjeev Gupta. Greensill’s financial backing of Mr Gupta’s sprawling industrial empire has continued despite the controversy. The FT reported last week that Greensill arranged a €2.2bn debt facility for Sanjeev Gupta’s Liberty House group in June, which funded the acquisitive industrialist’s purchase of seven steelworks in mainland Europe.
One of Greensill’s signature techniques is “reverse factoring”, where financial institutions pay a company’s suppliers early. While large multinational companies use the technique to manage lumpy payments more smoothly, it can also disguise a troubled company’s mounting borrowings.
Rating agency Moody’s recently said this type of supply-chain finance had “hidden risks” due to its “limited disclosure requirements”, citing reverse factoring’s role in the collapse of UK outsourcer Carillion and Spanish energy company Abengoa.
Greensill arranged financing for Abengoa through an off-balance-sheet vehicle before it filed for bankruptcy protection in 2015.
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