Greensill's Overnight Downfall Was Many Months in Making
Added 03-04-21 03:04:02pm EST - “(Bloomberg) -- From the outside, 2020 was bringing validation to the idea behind Lex Greensill's financial empire.His eponymous firm was seeking funds at a lofty valuation with the pitch that the pandemic laid bare small suppliers'…” - News.yahoo.com
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(Bloomberg) -- From the outside, 2020 was bringing validation to the idea behind Lex Greensill’s financial empire.
His eponymous firm was seeking funds at a lofty valuation with the pitch that the pandemic laid bare small suppliers’ need to be paid quickly.
But by the middle of last year, two parallel sets of events were quietly threatening two of the biggest sources of funding that enabled his brand of financial disruption -- eventually bringing the firm to a breaking point.
In July, an obscure Australian insurer refused to extend policies covering the loans Greensill made, taking away the security blanket that allowed major investors like Credit Suisse Group AG to get comfortable with his courting clients below their radar. And around the same time, the German regulator BaFin started a probe into his fast-growing bank in Bremen.
At issue in both cases was the question of risk, and in BaFin’s case, the amount of it that was tied to another entrepreneur in Greensill’s inner circle, Sanjeev Gupta. He had been an early client and investor in Greensill, and the loans to Gupta’s firms fueled the growth of both men’s conglomerates.
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