Financier Greensill files for UK insolvency after valuation fears

London

GREENSILL Capital filed for administration in the UK, capping a stunning collapse for the supply chain finance company after key backers walked away over concerns about the valuation of its assets.

A hearing was held in London on March 8 to review the submission, according to court documents. Lex Greensill's eponymous company had been readying the filing since last week, after Credit Suisse froze and then later started winding down US$10 billion of funds that bought products from Greensill. That decision set off a chain of events that also saw regulators in Germany shut down its local bank.

Greensill remains in talks with Apollo-backed Athene Holding on the sale of its operating business, though any transaction will likely be at a fraction of the US$7 billion valuation that the company had sought in fundraising talks last year when it was considering plans to go public. Athene is offering about US$60 million for Greensill's IT and intellectual property, the court documents showed.

Greensill unravelled in a matter of days once the lack of confidence began to sweep across the financial world. At the heart of the trouble are loans made by its supply chain finance business.

Greensill backers from Credit Suisse to Softbank Group and GAM Holding signalled doubts about the debt, upending the multi-billion-dollar empire. It also emerged that Softbank's Vision Fund had substantially written down its US$1.5 billion holding in Greensill late last year.

Grant Thornton has been appointed as joint administrators, and is "in continued discussion with an interested party in relation to the purchase of certain Greensill Capital assets," the firm said in an e-mailed statement. Bloomberg reported last week that Greensill was in the process of filing for insolvency.

Some of the most high-profile drama took place in Germany, where regulator BaFin shuttered Greensill Bank and asked law enforcement officials to investigate accounting irregularities. BaFin spent months probing the bank's exposure to companies linked to UK industrialist Sanjeev Gupta.

About 90 per cent of Greensill's revenues were derived from non-investment grade borrowers, according to filings from the court. The largest of those clients is Mr Gupta, according to the documents.

Pressure on Greensill ratcheted up as it lost its allies, with Credit Suisse freezing and then deciding to liquidate the family of funds that invest in Greensill-sourced loans, citing "uncertainty" about the valuations of some of the debt. The Swiss bank also last week demanded repayment of a US$140 million loan it had made to Greensill.

The firm was unable to do this and was therefore cash insolvent, the filings showed. BLOOMBERG