The business empire of metal magnate Sanjeev Gupta and financier Lex Greensill leaned on each other to spur their growth. According to people familiar with the matter, managers and advisers of both businesses have for years encouraged the two men to disconnect their businesses.
They did not get it right. Now, Greensill’s firm, Greensill Capital, is insolvent, and Gupta’s conglomerate, GFG Alliance, is scrambling to survive.
The Greensill implosion has entangled a series of financial ventures, including Credit Suisse Group AG, which has frozen $ 10 billion in funds it manages with the firm. Regulators have taken over oversight of Greensill’s German bank after they said a special audit suspects bookkeeping involving Mr. Gupta found. The move comes despite a recent attempt by SoftBank Group Corp, Greensill’s largest external investor, to intervene directly with the regulator.
For GFG Alliance, which houses the Gupta family’s steel, aluminum and energy businesses and generates an annual revenue of $ 20 billion, the main source of funding has suddenly dried up.