Last summer, Steve Clapham and I collaborated on a piece about Greensill Capital. At the time, Greensill was valued at $3.5 billion, flying high alongside the likes of Revolut and Klarna among the most valuable financial technology companies in Europe. In truth, it wasn’t really a fintech, but the company wasn’t shy to promote itself as one and, armed with Softbank investment and a sky-high multiple on sales, it looked like it may have been getting away with it.
Nevertheless, a look under the surface revealed that all was not right. Founded in 2011 by Lex Greensill, the company was a pioneer in a new field of supply chain finance. Steve is an expert in forensic accounting and I’ve seen a fair few financial companies in my time and we agreed – this was a wrong ‘un. We concluded:
“The result is an institution drawn to scandal which itself raises several red flags. No-one comes out of this looking good – not the pioneer, nor its main investor, nor the companies it services.”
The incoming correspondence each of us received after publishing was very high. Clearly, Greensill was raising eyebrows far and wide.
This week, Greensill collapsed. On Monday, an important insurance contract underpinning some of the company’s assets didn’t renew; later that day Credit Suisse suspended redemptions on funds linked to Greensill assets; in Australia, the company was refused insolvency protection; in Germany, regulators closed down its bank; and at headquarters in the UK, Greensill began the process of filing for bankruptcy.
Read on or listen to our conversation (recorded on March 8, 2021):
About This Audio Series:
MOI Global is delighted to engage in illuminating conversations on the financial sector with Marc Rubinstein, whose Net Interest newsletter we have found to be truly exceptional. Our goal is to bring you Marc’s insights into financial services businesses and trends on a regular basis, with Marc’s weekly essays serving as inspiration for our discussions.
About Marc Rubinstein:
Marc is a fellow MOI Global member, managing partner of Fordington Advisors, and author of Net Interest. He is a former analyst and hedge fund manager, most recently at Lansdowne Partners, with more than 25 years of experience in the financial sector. Marc is based in London.
About Net Interest:
Net Interest, authored by Marc Rubinstein, is a newsletter of insight and analysis from the world of finance. Enjoyed by the most senior executives and smartest investors in the industry, it casts light on this important sector in an easy-to-read style. Each post explores a theme trending in the sector. Between fintech, economics and investment cycles—there’s always something to talk about!
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