Is Apollo planning to save Greensill from the brink of collapse?

The American private equity firm Apollo revealed his intention to save administration are on the verge of collapse.

Apollo made a US $ 59.5 million cash offer for Greensill Capital’s computer systems and intellectual property after the fintech firm filed its administration brief on March 8.

But the investment firm has now halted talks to acquire parts of Greensill following an escalating standoff with a critical technology provider for the once-high-flying supply chain financial group, the reported.

If Apollo’s offer is retained, it will potentially save the jobs of up to 500 UK Greensill employees. But a collapsed deal would reveal Greensill’s dependence on technology partners, despite the company selling itself as a company renowned for its excellence in AI and ML.

Fall of Greensill Capital

London-based fintech Greensill Capital specializes in providing procurement finance and related services. It was also Liberty Steel’s biggest funder.

According to reports, Greensill filed an administration claim citing “serious financial distress” after being unable to repay a $ 140 million loan from Credit Suisse following GFG Alliance defaults – one of main fintech customers.

The demise of Greensill Capital is expected to threaten hundreds of jobs at GFG Alliance’s subsidiary Liberty Steel, despite the company’s prosperity globally and steel prices at their highest for 13 years.

However, GFG Alliance CEO Sanjeev Gupta has warned his UK steel business is in serious trouble following the collapse of Greensill, the company’s largest loan provider.

Further job losses

Gupta has tried to allay fears by insisting that Liberty Steel has sufficient funds for the near future and that measures are being put in place to save the ailing UK steel company. But he also said demand for his company’s products had fallen by 60% due to the COVID-19 pandemic due to the downturn in the aerospace industry.

However, if GFG Alliance went bankrupt, tens of thousands of engineering and steel jobs would be at risk in around 30 countries, including Australia, France, the UK and the UK.

In the UK alone, Liberty Steel is the third largest steel producer and employs around 5,000 people in steel production, engineering and fabrication.

Losing the Liberty Steel sites would be devastating for the UK steel industry as they are also among the last UK factories to produce raw metal.

Greensill Insurance Line

Reports suggest Greensill was plunged into crisis following its main insurer’s refusal to renew a $ 4.6 billion contract. The company filed for bankruptcy after losing insurance coverage for its debt repackaging business, saying in a court file that its biggest client, GFG Alliance, had started to default on its debts.

Credit Suisse then froze $ 10 billion in fintech funds, causing the company to collapse.

Adding fuel to the blaze, 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 about its exposure to Greensill Capital.

However, Tokio Marine issued a statement saying its exposure to the affected fintech was not severe enough to cause its forecast for the year to change.

Reports say the move follows legal action against Tokio Marine last week when it was prosecuted in connection with Greensill’s unsuccessful attempt to extend two policies covering the $ 4.6 billion in funds. rolling.

Downing Street Intervention

Yesterday, Downing Street appeared poised to intervene in the affair as unions pressured government ministers to take an active role in preventing job losses and to keep UK Liberty Steel sites operational.

GFG Alliance’s Stocksbridge plant manufactures parts for the aerospace industry, while the Rotherham site produces steel used in the automotive and rail industry. Another factory in Hartlepool manufactures pipes for the offshore oil industry.

Sanjeev Gupta also owns Scotland’s only aluminum smelter and is working on several hydropower contracts.

A statement released by Downing Street said the news that thousands of jobs could be at risk was “very worrying”. Boris Johnson’s official spokesperson said: “We continue to monitor developments closely.”

Meanwhile, Greensill Capital released a public statement via its website saying, “The joint directors are in ongoing discussions with an interested party regarding the purchase of certain assets from Greensill. As these remain pending, it would be inappropriate. to comment for now. “

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