3/03/2021 – 12:31 Updated: 13:11 – 03/03/21
Greensill Capital, the financial firm advised by former British Prime Minister David Cameron, is in the process of filing for bankruptcy in the UK, with the aim of avoiding bankruptcy following Credit Suisse’s decision to freeze $ 10 billion in mutual funds that they were linked to credit transactions of the British because it sees “considerable uncertainty about the valuations of some of the shares.”
The firm plans to go ahead with an insolvency filing (which would be to file for bankruptcy under Spanish law) as it pursues the sale of the company and has open discussions with the combination of Athene Holding and Apollo Global Management to sell its operating business. .
Apollo and Athene can provide loan financing as part of any deal and may seek to exclude any assets they deem too risky. “While the structure of the new business is still being determined, we expect the transaction to ensure that the majority of Greensill customers continue to be funded in the same way as they are today, while preserving a substantial number of jobs.” Greensill stated.
“Considerable uncertainty about the valuations of some of the holdings”
The company was founded in 2011 by former Citi banker Lex Greensill and is dedicated to providing short-term loans to businesses to extend the time they have to pay their bills. Lex Greensill’s effort to disrupt a niche portion of global finance was derailed when the credit insurance backing some of his company’s loans expired, creating uncertainty and mistrust.
On Tuesday GAM Holding AG said it will begin to liquidate a fund that invests in loans obtained by Greensill, while Bond and Credit Company, an Australian division of Tokio Marine Holdings, did not renew commercial credit insurance on some holdings of Credit’s funds. Suisse on March 1. Without the insurance to back the loans, the valuation of the securities became difficult and, as a result, the funds were closed to repayments.
German financial regulator BaFin appointed a special representative to oversee Greensill Bank AG’s day-to-day operations after raising concerns about the concentration of its loans, and is close to freezing payments inside and outside the banking unit.
Fund freezes are around 11 million
The freezes of funds worth around 11,000 million of dollars deprived Greensill of large buyers for its assets at the same time that regulators in Germany pressured his bank to diversify its holdings.
Greensill’s fall from grace has been swift, late last year the firm was talking about its growth plans, seeking a 7 billion valuation and eventually planning to go public.
Greensill said Tuesday that it had entered a “period of exclusivity with a leading global financial institution with a view to finalizing a transaction with them this week.” Any deal is expected to include “large parts of Greensill’s business and its assets under management,” the company said in a statement, although it did not identify a potential buyer.