The Greensill Capital bankruptcy has impacted a large number of actors: Credit Suisse, SoftBank Group, General Atlantic, and GFG Alliance. The case study is interesting because the rise of Greensill shows the importance of supply chain finance as well as the dangers of misusing this financial instrument.
In March 2021, Greensill Capital filed for bankruptcy. Greensill Capital had been a major supply chain financing company. When it went down, it affected a large number of partners in the global financing ecosystem. The repercussions are still ongoing at the time of writing in June 2021.
Figure 1 shows an overview of the global context of Greensill Capital’s financing activities. On the right are Greensill Capital’s customers. The most newsworthy of these customers have been GFG alliance (hereafter GFG) and Liberty Steel, both belonging to the mining empire of Sanjeev Gupta. Greensill Capital was financing customers of GFG as well as its supply chain partners. On the left of the figure are the sources of funds deployed by Greensill Capital. These include bankers like Credit Suisse and Greensill Bank, a German subsidiary of Greensill Capital, as well as equity financiers such as general Atlantic and Softbank. Some of these financiers are in turn financed by their own investors and taxpayers. So when Greensill Capital went down, it shook up all its customers and financiers.
The case study is useful for students who want to create or head a finance company. It shows how a finance firm can grow by leveraging network effects. It is also interesting for students to learn about the need for conjoint development of two-sided markets. A finance company needs to ensure the availability of investment funds from 3rd parties and, at the same time, it needs customers who require financing…
- Context and presentation of the case study
- Case-based pedagogy
- Greensill Capital used two financing concepts and combined them in a major innovation
- Fast growth, unbalanced portfolio and shady practices: the perpetual problem of the dark side
- Lessons from the Greensill case
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