JPMorgan Chase JPM -0.71%
& Co. is placing a bet for some of Greensill Capital’s customers, according to people familiar with the matter, raising an offer from Apollo Global Management Inc.
APO -3.56%
to buy the finance startup’s core business.
The largest US bank in assets is joining Taulia Inc., a technology platform that was the primary source of customers for Greensill. JPMorgan would provide $ 3.8 billion to finance business for former Greensill customers on the Taulia platform, people said.
Other banks are expected to join the effort and add more resources later, people said.
JPMorgan’s entry complicated negotiations between Apollo, Greensill and their insolvency practitioners, according to people familiar with the negotiations. A deal with Apollo is now unlikely, people said. Apollo was in talks with Greensill to buy its core business for about $ 100 million, The Wall Street Journal reported last week.
Greensill filed for insolvency in the UK on Monday. The company plunged into the crisis last week, when Credit Suisse Group AG
CS 1.30%
froze $ 10 billion in investment 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 business.
Bloomberg News previously reported that the Apollo-Greensill negotiations were stalled.
The emergence of other players to fill the Greensill void alleviates fears that the startup’s collapse will affect supply chain financing businesses. It also shows creditors’ eagerness to find new business. Extremely low interest rates and large amounts of liquidity in the banking system dampened companies during the Covid-19 pandemic.
Supply chain finance is a type of short-term loan traditionally provided by major banks like JPMorgan and Citigroup Inc.
Ç -1.70%
Loans, which help companies to extend payment terms to suppliers, are generally 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 customers included a number of top-tier companies and government agencies. He also relied heavily on a number of customers, including companies affiliated with UK steel tycoon Sanjeev Gupta and coal companies owned by West Virginia Governor Jim Justice, the Journal reported. Greensill made loans to companies belonging to his two largest outside investors, SoftBank Group Corp.
9984 -0.10%
and the private equity firm General Atlantic.
Based in San Francisco, Taulia is an online business-to-business platform that connects companies to their suppliers. Suppliers can use the platform to register for prepayment, to be paid by companies or by third-party financial institutions. It invites different financial institutions to offer financing for business.
Many of Greensill’s investment-grade customers came to him 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 business for many of its customers.
JPMorgan started acting as financier for Taulia’s platform last year, before placing a capital investment in the company with others that valued it at around US $ 400 million. Taulia had an exclusive financing deal with Greensill before letting it expire in late 2019, the Journal reported.
JPMorgan-Taulia’s new $ 3.8 billion financing package would start in a few days and serve as a stopgap measure for Greensill customers, people said.
Apollo was planning to use its insurance affiliate, Athene Holding Ltd.
, to provide the capital needed to take on Greensill’s supply chain loan customers. It was planning to extend about $ 7 billion in lending capacity.
Write to Julie Steinberg at [email protected] and Duncan Mavin at [email protected]
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