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According to people familiar with Greensill’s operations and documents reviewed by The Wall Street Journal, Greensill Capital relied on a handful of clients for large portions of its revenue, including a coal miner owned by the governor of West Virginia .
Bluestone Resources Inc., the coal mining company owned by the West Virginia government, Jim Justice, borrowed about $ 850 million from Greensill, making it one of Greensill’s largest customers, said the people familiar with Greensill’s operations. said.
Representatives from Bluestone and the West Virginia governor’s office did not immediately respond to requests for comment.
GREENSILL CAPITAL FACE POSSIBLE INSOLVENCY TO CREDIT SUISE SHORT INVESTMENT FUNDS: WSJ
Greensill has long said it works with millions of customers, according to its website, many of which are small suppliers to corporate clients, and have partnerships with dozens of banks, insurers and companies.
But a handful of relationships have become crucial to Greensill over the past few years. For most of 2019, more than 90% of Greensill’s revenue comes from five customers, according to an internal Greensill report reviewed by the Journal. In 2020, according to the report, it was about 70%.
According to Greensill Capital, a handful of clients supported large portions of its revenue, including a coal miner owned by the governor of West Virginia, according to people familiar with Greensill’s operations and documents reviewed by The Wall Street Jour.
According to the people, British steel magnate Sanjeev Gupta and British wireless giant Vodafone Group PLC included.
Greensill was founded in 2011 by former banker Morgan Stanley and Citigroup Inc. Lex Greensill. It went into crisis last week when Credit Suisse Group AG froze $ 10 billion in investment funds that Greensill relied on to boost its business.
Greensill plans to file for insolvency in the UK in the coming days and is in talks to open its operating business to Apollo Global Management Inc. to sell, the Journal reported, citing people familiar with the matter. The sale would account for a fraction of the highest valuation of $ 4 billion in 2019.
Greensill’s loans were mostly short-term, and some customers without access to cash will have to find alternative sources of financing in the coming weeks and months. Apollo is likely to fill the gap for some, but not all, Greensill’s customers through an insurance subsidiary, the Journal reported.
Greensill specializes in an area known as supply chain financing, a form of cash advance that allows companies to extend the time to pay bills. Greensill packed those cash advances into bonds like bonds. Credit Suisse’s funds were a major buyer of these bonds, giving Greensill a firepower to expand its business.
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Credit Suisse sold the funds to insurers and other professional investors, and according to the fund documents sent to investors, classified as a relatively low risk.
In addition to Bluestone, Greensill’s other U.S. customers included several blue-chip companies and government agencies, according to documents sent to investors by Credit Suisse. More than half of the assets in the Credit Suisse funds were linked to customers in the US from January, according to the documents.
Credit Suisse said on Friday it would liquidate the funds. According to documents sent to investors, Bluestone was among the companies in the Credit Suisse funds.
Mr. Justice is the billionaire governor of West Virginia who switched parties from Democratic to Republican in 2017. He owns several coal-related businesses in the region and has solved a number of cases in recent years due to alleged non-payment of bills, according to court records published by the investigative journalism website ProPublica.
Supply chain financing is almost always repaid in cash. But for one loan in 2018, coal miner Greensill repaid in a combination of cash and shares. More than half of Greensill’s profits for 2018 were captured in warrants worth $ 25 million that gave Greensill the right to own shares in the coal company, the Journal reported earlier.
Last summer, Bluestone’s chief adviser told Journal that the company has been working with Greensill since 2018 to improve its working capital position. The portion of the fees it paid Greensill to share warrants that year was ‘redeemed in full shortly thereafter,’ without further elaboration.
Another important relationship between Greensill was with Mr. Gupta and his GFG Alliance group, according to people familiar with the matter. Germany’s bank regulators have banned activities at a bank owned by Greensill after an audit failed to provide evidence of debtors bought from GFG Alliance, which owns steel mills and other industrial assets in a dozen countries.
A spokesperson for GFG said that the operations are proceeding normally and that he is making progress with his discussions to obtain funding from other financial institutions.
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Vodafone was a long-term customer of Greensill. According to people familiar with the relationship and an email, a financial fund that Greensill co-founded with GAM Holdings AG in GAM Holdings AG was referred to in both businesses as the “Vodafund”. reviewed by the Journal.
According to the company’s spokesperson, Vodafone is no longer an investor in the fund.
The Journal reported Friday that Greensill used the Credit Suisse funds to lend to two of its biggest outsiders, the Vision Fund of SoftBank Group, and General Atlantic.