JPMorgan Chase JPM -0.71%
& Co. is making a play for some of Greensill Capital’s clients, according to people familiar with the matter, revoking an offer from Apollo Global Management. Inc.
to buy the core business of the financial startup.
America’s largest bank by asset is partnering with Taulia Inc., a technology platform that was the main source of clients for Greensill. JPMorgan would provide $ 3.8 billion to fund deals to former Greensill clients on the Taulia platform, the people said.
Other banks are expected to participate in the effort and add more funds later, the people said.
JPMorgan’s entry has complicated conversations between Apollo, Greensill and their insolvency administrators, according to people familiar with the conversations. A deal with Apollo is now unlikely, the people said. Apollo had been in talks with Greensill to buy his core business for about $ 100 million, The Wall Street Journal reported last week.
Greensill filed for bankruptcy in the UK on Monday. The company plunged into crisis last week when Credit Suisse Group AG
froze $ 10 billion in mutual funds that invested exclusively in Greensill’s supply chain loans, a type of short-term corporate cash advance. Without Credit Suisse funds, Greensill was unable to process new deals.
Bloomberg News previously reported that the Apollo-Greensill talks were stalled.
The emergence of other players to fill the Greensill void lessens fears that the startup’s collapse will spread through the supply chain finance business. It also shows the lenders’ enthusiasm for finding new business. Ultra-low interest rates and massive amounts of liquidity in the banking system dampened businesses during the Covid-19 pandemic.
Supply chain financing is a type of short-term loan traditionally provided by large banks such as JPMorgan and Citigroup. Inc.
Loans, which help companies lengthen the time they have to pay suppliers, are usually 60 or 120 days and must be constantly renewed. It is usually a low-margin business that benefits from economies of scale.
Greensill’s clients included a variety of blue-chip companies and government agencies. It also relied heavily on a set of clients, including companies affiliated with UK steel magnate Sanjeev Gupta and coal companies owned by West Virginia Governor Jim Justice, the Journal reported. Greensill made loans to companies owned by its two largest outside investors, SoftBank Group Corp.
and private equity firm General Atlantic.
Based in San Francisco, Taulia is an online business-to-business platform that links businesses with their suppliers. Providers can use the platform to sign up for advance payment, which will be paid by third-party companies or financial institutions. Invite different financial institutions to offer financing for the deals.
Many of Greensill’s investment grade clients came to him through Taulia, which maintains relationships directly with end users. Greensill had little of its own technology, according to people familiar with its operations, and used Taulia to process deals for many of its clients.
JPMorgan began acting as a funder on Taulia’s platform last year, before making an equity investment in the company with others that valued it around $ 400 million. Taulia had an exclusive financing agreement with Greensill before letting it expire at the end of 2019, the Journal reported.
The new $ 3.8 billion JPMorgan-Taulia financing package would begin in a few days and serve as an interim measure for Greensill clients, the people said.
Apollo planned to use its insurance affiliate, Athene Holding Limited.
, to provide the capital needed to take care of Greensill’s supply chain loan clients. It planned to extend around $ 7 billion in creditworthiness.
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