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Vision Fund injected at least $ 400 million into Greensill Capital late last year, according to people familiar with the issue, deepening the potential losses facing the technology investment giant in the startup’s collapse.
The cash infusion added to the $ 1.5 billion the Vision Fund invested in Greensill in 2019. The money, which was not previously reported, was used as a financial backstop when another Vision Fund company came close. don’t get a loan from Greensill anymore, people said.
Greensill, which specializes in providing short-term cash loans to companies, filed for insolvency this week after regulators took over its banking unit and Credit Suisse group. AG
froze the essential investment funds for the startup’s operations.
Greensill packaged loans to securities companies, known as notes, which were purchased by Credit Suisse funds and sold to investors as low-risk, money market investments.
SoftBank, founded by billionaire Masayoshi Son, is an investment giant with interests spanning microchips, self-driving cars, satellites, e-commerce and mobile networks. The Japanese conglomerate’s $ 100 billion Vision Fund and a smaller successor fund have invested in more than 80 companies. In addition to Greensill, they include Uber Technologies Inc.
and owner TikTok ByteDance Ltd.
The $ 400 million was the latest in a long line of complex financial arrangements between the Vision Fund and Greensill. SoftBank is preparing to note its Greensill investment, The Wall Street Journal reported last week, citing someone familiar with the matter.
In March 2020, as Covid-19 entered the markets, investors withdrew their money from Credit Suisse funds, exempting Greensill from a key source of off-balance sheet financing. SoftBank has invested $ 1.5 billion in Credit Suisse-Greensill funds to keep them running, the newspaper reported last week.
This money was separated from the $ 1.5 billion investment of the Vision SoftBank Fund made directly in Greensill in two parts in 2019.
Greensill used Credit Suisse funds to lend to other SoftBank Vision Fund companies. Credit Suisse funds had a total of about $ 750 million in loans to finance the supply chain to Vision Fund companies at the end of March 2020, according to the fund’s documents sent to investors.
These included the automated financing company Fair Financial Corp .; Indian hotel chain Oyo Hotels & Homes; View glass manufacturer Inc.
; and the Chinese online car trading platform Chehaoduo Group.
In essence, SoftBank was Greensill’s largest external lender, a borrower through Credit Suisse funds and a borrower through its Vision Fund companies.
The multiple roles triggered a review at Credit Suisse that led to changes in the way the fund worked, the Journal reported last year. SoftBank repurchased its position in the funds until July last year, although loans to Vision Fund companies continued.
Another Greensill borrower from Vision Fund was Katerra, based in the USA, a contractor for the construction of factory complexes. In December, SoftBank invested $ 200 million in starting construction to help it avoid bankruptcy. Katerra’s chief executive told the newspaper at the time that Greensill had also forgiven $ 435 million in funding in exchange for a 5% stake in the company.
It was unclear how Greensill would absorb the loss from the loan forgiveness.
The $ 400 million injection of SoftBank into Greensill was in the form of convertible debt, one man said. The money was allocated to compensate for Katerra’s inability to repay Greensill and would protect Credit Suisse investors from losing any Katerra-related banknotes, said several people familiar with the matter.
The directors of Vision Fund have long talked about the potential benefits to be gained through the collaboration of its participating companies. Greensill’s results show that the reality was more complicated.
Greensill’s collapse also highlights the risks of Vision Fund’s excessive betting on unproven companies. He had to note the value of other challenged investments, including office owner WeWork and Oyo Hotels.
Despite its failures, the technology giant has made some notable gains. In the last quarter of 2020, the Vision Fund recorded a gain of $ 13 billion on its investments. It is likely to earn multiples on its investment in South Korean e-commerce company Coupang Inc., which is expected to go public soon at a valuation in excess of $ 50 billion. DoorDash meal delivery service Inc.,
which went public earlier this year, has also proved a success.
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