Is Apollo plan to save Greensill on the brink of collapse?
The US private equity firm Apollo has revealed its plans to save from administration are on the verge of collapse.
Apollo made a US$59.5m cash offer for Greensill Capital's IT systems and intellectual property after the fintech company filed for administration on March 8th.
But the equity firm has now halted talks to acquire parts of Greensill following an escalating stand-off with a critical technology provider to the once high-flying supply chain finance group, the reported.
If the offer by Apollo is saved, it would potentially rescue the jobs of up to 500 UK Greensill employees. But a collapsed deal would reveal Greensill's reliance on technology partners, despite the firm selling itself as one with a reputation for AI and ML excellence.
Greensill Capital downfall
The London-based fintech Greensill Capital specialised in the provision of supply financing and related services. It was also Liberty Steel's biggest financial backer.
According to reports, Greensill filed for administration citing "severe financial distress" after being unable to pay back a $140m Credit Suisse loan following defaults from GFG Alliance - one of the fintech's key customers.
The demise of Greensill Capital looks set to threaten hundreds of jobs at GFG Alliance's subsidiary, Liberty Steel, despite the firm thriving globally and enjoying a 13-year high in steel prices.
However, GFG Alliance's chairman CEO, Sanjeev Gupta, warned his UK steel business was in serious trouble following the collapse of Greensill, the company's largest loan provider.
Further job losses
Gupta attempted to allay fears by insisting that Liberty Steel has enough funding for the near future and measures are being put in place to salvage the struggling UK steel business. But he also said that demand for his company's products has fallen by 60% as a result of the COVID-19 pandemic because of the aerospace industry downturn.
However, if GFG Alliance were to go bust, tens of thousands of jobs in engineering and steel would be at risk across an estimated 30 countries, including Australia, France, the UK and the UK.
In the UK alone, Liberty Steel is the third-largest steel producer and employs an estimated 5,000 people in steel production, engineering and manufacturing.
The loss of the Liberty Steel sites would be devastating to the British steel industry as they are also among the last plants in the UK to produce raw metal.
Greensill insurance row
Reports suggest that Greensill was plunged into crisis following its main insurer's refusal to renew a $4.6bn contract. The company filed for insolvency after losing insurance coverage for its debt repackaging business, stating in a court filing that its biggest client, GFG Alliance, had started to default on its debts.
Credit Suisse then froze $10bn in funds to the fintech, causing the demise of the company.
Adding further fuel to the fire, the Japanese insurance provider, Tokio Marine said the loss of Greensill's insurance policies, which were the main cause of the collapse, may not have been valid. Investors are also pressuring the company to reveal details regarding its exposure to Greensill Capital.
However, Tokio Marine issued a statement saying its exposure to the stricken fintech was not severe enough to cause a change in its guidance for the financial year.
Reports say the move follows legal action against Tokio Marine last week when it was sued in a failed attempt by Greensill to provide an extension of two policies covering the $4.6bn in working capital facilities.
Downing Street intervention
Yesterday, Downing Street looked set to intervene in the matter as unions pressured government ministers to take an active role in preventing job losses and to keep Liberty Steel's UK sites operational.
GFG Alliance's Stocksbridge plant manufactures aerospace parts, while the Rotherham site produces steel used in the car and rail industry. Another factory in Hartlepool makes pipes supplying the offshore oil industry.
Sanjeev Gupta also owns Scotland's only aluminium smelter and is working on several hydroelectric contracts.
A statement released by Downing Street said news that thousands of jobs could be at risk was 'very worrying'. Boris Johnson's official spokesman said, "We continue to follow developments closely."
Meanwhile, Greensill Capital issued a public statement via its website saying, "Joint administrators are in continued discussion with an interested party in relation to the purchase of certain Greensill assets. As these remain ongoing, it would be inappropriate to comment at this time."
Findexable: COVID-19 hasn’t slowed down fintech investment
The release of Findexable’s 2021 Global Fintech Rankings report seems to confirm that the COVID-19 pandemic has had no deleterious effect on sector growth.
Compiled annually, Findexable’s report provides one of the most comprehensive surveys of global fintech. From regions to countries and individual cities, it compiles and analyses key performance data and gives insight into the leaders and up-and-comers.
In total, the company explored 264 cities across 83 countries and incorporated data from various media outlets, SEO databases, and over 60 fintech associations. CEO Simon Hardie spoke enthusiastically of the findings:
“The level of investment and activity in the fintech sector is hugely gratifying for those of us who have been championing the industry. It is especially good to see that the pandemic didn’t slow down, and may have in fact accelerated, the adoption of fintech in parts of the world that have previously been underserved.”
The leading hubs
Notably, there has been no movement in the 2021 list’s top three fintech hubs. While most others made incremental gains, it was Tel Aviv that made the most significant leap from 20th to 5th. Meanwhile, in a surprising shift, Singapore slipped from 4th to 10th:
- San Francisco Bay (same as 2020)
- London (same as 2020)
- New York (same as 2020)
- São Paulo (+1)
- Tel Aviv Area (+15)
- Berlin (+3)
- Boston (+1)
- Los Angeles (-2)
- Hong Kong (+2)
- Singapore (-6)
The leading countries
Findexable’s top 10 countries for fintech reflect the generally incremental shift observed among the hubs:
- US (same as 2020)
- UK (same as 2020)
- Israel (+9)
- Singapore (-1)
- Switzerland (same as 2020)
- Australia (+2)
- Sweden (same as 2020)
- The Netherlands (-2)
- Germany (+3)
- Lithuania (-6)
UK fintech has continued to ramp up at an accelerated pace: three new cities entered Findexable’s index for the first time, bringing the country’s total up to 13. The country remains fairly secure as Europe’s fintech leader, particularly as strong competitors like Lithuania fell in the rankings. However, Germany’s ascendance to the top 10 could indicate the beginning of a new challenger.
In North America, the US remains practically unchallenged by Canada. Meanwhile, both Australia and China have gained on Singapore, with the former seeming to be a likely APAC leader by 2022 if current trends continue.
As can be observed from the top countries and hubs, Israel’s fintech output has been proportionally one of the most impressive exhibited. It has claimed the top spot for MEA, followed by the UAE and Kenya - both of which also made significant gains. Finally, Brazil and Uruguay lead Latin America and the Caribbean.
Fintech: The global revolution
Reviewing the statistics compiled in Findexable’s report lends credence to Hardie’s words: fintech is greater than ever before and not even one of the world’s most disruptive events (COVID-19) has been able to prevent its growth.
Elliott Limb, Chief Customer Officer of Mambu, which sponsored the report, called every fintech part of a “global revolution” that is transforming financial services for the better.
“They are changing the way we save, spend, borrow, and invest money. Whether competing, cooperating or supporting traditional financial institutions, they are reshaping digital services for a real-time, on-demand world.
“Whether it is an aspiring unicorn, a neobank seeking new markets, a provider that wants to go digital, or a financial institution that wants to act like a fintech, you need a roadmap [...] a guide to where to begin and where to go. This is why a ranking system is important.