Apollo Global Management’s plan to buy parts of stricken finance company Greensill Capital out of administration is on the verge of collapse, according to people familiar with the matter.
The US private equity company has halted talks to buy parts of Greensill due to an escalating stand-off with a key technology provider to the once high-flying supply chain finance group, the people added.
The talks were throw into disarray after US technology company Taulia, which supplies the digital platform most of Greensill’s customers use to manage their working capital, looked to move its users to other providers, primarily the US bank JPMorgan, the people added.
The type of financing that Greensill provided was raised against invoices between companies and their suppliers, but the SoftBank-backed company had little in the way of its own technology to track the flow of these corporate bills.
Instead, its customers used platforms from tech groups to digitise this process, with Taulia’s systems servicing key Greensill clients such as pharmaceutical group AstraZeneca.
Taulia told the Financial Times that its clients wanted “flexibility in the source of funding”.
“Following the recent, well-documented challenges faced by Greensill we have been working to ensure that our clients have continued choice over their funding sources and continuation of funding,” Taulia added.
Apollo, Greensill and JPMorgan declined to comment.
Apollo was only interested in acquiring those parts of Greensill that would give it access to financing lines with large companies such as telecoms group Vodafone. The group had no interest in taking on any financing for Greensill’s largest customer, industrialist Sanjeev Gupta’s GFG Alliance, people familiar with the matter have said.
If the talks with Apollo, which this week struck a $29bn deal to merge with insurance affiliate Athene, cannot be revived, Greensill appears to have few options.
Greensill disclosed in its administration filing earlier this week that Apollo had offered $59.5m for its intellectual property and IT systems, which would have involved it taking on “the majority” of the more than 500 employees of its UK business. The US group was “the only credible bidder”, court documents said.
A failure by Apollo to strike a deal would highlight Greensill’s heavy reliance on other companies’ technology platforms, even though founder Lex Greensill frequently touted his company’s prowess in “artificial intelligence” and “machine learning”.
Taulia for years had an exclusivity agreement with Greensill, but that expired early 2020. In April last year, the San Francisco-based company announced what it termed a “strategic alliance” with JPMorgan, to match its technology platform with the bank’s funding.
High-profile technology investors such as SoftBank’s $100bn Vision Fund poured money into Greensill, cementing its status as one of the world’s most valuable fintechs.
General Atlantic, known for its early backing of financial technology success stories, lauded Greensill’s technological savvy, when the US venture capital group invested $250m into the company in 2018.
At the time, General Atlantic’s co-president Gabriel Caillaux praised Greensill’s “fully integrated technology and funding solutions”, as well the company’s “competitive advantage” in the supply chain finance market, where companies effectively borrow money to pay their suppliers.
Despite the reliance of Greensill on another company’s technology, Apollo still believed the deal was likely to proceed until recently.
The US private equity company’s lawyer said in court on Monday that while there were a “few issues to resolve”, it’s negotiations were in the “final stages” and should have been “completed shortly”.
Bloomberg first reported that Apollo’s talks with Greensill could collapse.
Meanwhile, Credit Suisse has removed three executives at the centre of the unravelling crisis surrounding its Greensill-backed supply-chain finance funds.
Michel Degen, head of asset management in Switzerland and Emea, Luc Mathys, head of fixed income in the region, and Lukas Haas, a portfolio manager for the funds, have been placed on temporary leave by the Swiss bank, according to an internal memo on Wednesday.
It said the three men “will not be performing their roles” and had been replaced on a temporary basis by Filippo Rima, head of equities in Switzerland and Emea, and Alexandre Bouchardy, head of asset management strategy.
The crisis over the $10bn supply chain finance funds came to a head last week when Credit Suisse was forced to suspend the four funds, driving Greensill to file for insolvency this week.
Credit Suisse has been in crisis mode over the past two weeks, as it scrambles to limit the losses from the funds in light of Greensill’s insolvency and other potential defaults. Executives are also reviewing the circumstances of a $140m bridging loan provided to Greensill last November.
A person briefed on the moves said: “Senior management felt they wanted the right people to move the situation forward.”
While Haas was nominally the Credit Suisse funds’ manager, Greensill had wide-ranging control over what assets it put into the fund, according to people familiar with the arrangement.
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March 10, 2021 at 01:58PM
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Apollo’s Greensill bid close to collapse - Financial Times
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