British Business Bank Removes Guarantee on Loans to Greensill
Sky News reported that Britain’s state owned business bank has stripped Greensill Capital of a government guarantee on loans to Mr Sanjeev Gupta’s empire, after deciding it had breached the terms of pandemic lending programmes. British Business Bank has informed Greensill that it is removing a taxpayer guarantee following an investigation into the UK based fintech company's compliance with the rules of the Coronavirus Large Business Interruption Loan Scheme. City sources said that the accountancy firm EY and the law firm Hogan Lovells had been drafted in by the government to assess whether Greensill was in breach of the CLBILS rules. One banking insider said the advisers had concluded in recent days that the terms had been breached in relation to areas such as the adequacy of the security taken by Greensill over assets owned by GFG Alliance, the network of companies headed by Mr Gupta.
Under the schemes introduced early in the COVID-19 crisis by Mr Rishi Sunak, the chancellor, taxpayers guarantee 80% of the value of the loan, although borrowers remain fully liable for the debt. The CLBILS programme has been extended until the end of the month, and Mr Sunak plans to set out further details of a successor scheme in his Budget this week.
Greensill has raised billions of dollars in equity from shareholders including SoftBank's Vision Fund, which has backed prominent tech companies including Uber Technologies, WeWork and the British augmented reality start-up Improbable. General Atlantic, the private equity firm, is also an investor. Greensill helps clients manage cash by paying their suppliers early in return for a discount. According to company data, it provided more than USD 143 billion to more than 10 million customers and suppliers in 2020. It describes itself as the world's leading non-bank provider of supply chain finance.
It has also emerged that Greensill is in talks about USD 100 million sale of its operating business to Apollo Global Management, with the alternative outcome a possible administration handled by Grant Thornton.