JPMorgan jumps to Greensill Fray, hindering Apollo’s conversations

Other banks are expected to participate in the effort and add more funding later, according to people.

JPMorgan’s entry has complicated conversations between Apollo, Greensill and their insolvency administrators, according to people who know the conversations. An agreement with Apollo is now unlikely, according to people. Apollo had held talks with Greensill to buy its main business for about $ 100 million, The Wall Street Journal reported last week.

Greensill filed for insolvency in the UK on Monday. The company went into crisis last week when the Credit Suisse Group AG

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froze $ 10 billion in mutual funds that invested exclusively in loans to the Greensill supply chain, a type of short-term corporate cash advance. Without Credit Suisse funds, Greensill could not process new transactions.

Bloomberg News previously reported that Apollo-Greensill talks were stalled.

The emergence of other players to fill the Greensill gap diminishes fears that the collapse of the startup will occur through the supply chain financing business. It also shows the eagerness of lenders to find new business. Ultralight interest rates and massive amounts of liquidity in the banking system dampened companies through 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.

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Loans, which help companies extend how long they have to pay suppliers, are usually 60 or 120 days and need to be renewed constantly. It tends to be a low-margin business that benefits from economies of scale.

Greensill’s clients included a number of companies and government agencies. He also relied heavily on a set of clients, including companies affiliated with British steel tycoon Sanjeev Gupta and coal companies owned by West Virginia Gov. Jim Justice, the newspaper reported. Greensill granted loans to companies owned by its two major external investors, SoftBank Group Corp.

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, and private equity firm General Atlantic.

Headquartered in San Francisco, Taulia is an online business platform that links businesses with their suppliers. Providers can use the platform to sign up for prepayment, which will be paid by third-party companies or financial institutions. Invite different financial institutions to offer financing for offers.

Many of Greensill’s investor-quality customers came through Taulia, which maintains relationships directly with end users. Greensill had little technology of its own, according to people familiar with its operations, and used Taulia to process bids for many of its customers.

JPMorgan began acting as a financier of the Taulia platform last year, before putting a capital investment in the company with others valued at around $ 400 million. Taulia had an exclusive financing agreement with Greensill before letting it expire in late 2019, the newspaper reported.

The new $ 3.8 billion JPMorgan-Taulia funding package would begin in a few days and serve as an uninterrupted measure for Greensill customers, according to people.

Apollo planned to use its insurance subsidiary, Athene Holding Ltd.

, to provide the capital needed to take over the supply customers of the Greensill supply chain. It planned to expand the lending capacity by about $ 7 billion.

Write to Julie Steinberg at [email protected] and Duncan Mavin at [email protected]