Lex Greensill CBE, founder and chief executive of Greensill Capital, shares his insight into supply chain finance and more in a Q&A with Raconteur:
What is Greensill and what does it do?
We are a market-leading provider of working capital finance, unlocking cash so companies can put it to work. Greensill is all about the democratisation of capital, making working capital available to the smallest firms in the same way as the big banks offer it to the largest multinationals. We believe every company has the right to working capital as this oils the wheels of global business.
However, we are about much more than supply chain finance (SCF). Greensill uses the power of financial markets to unlock capital on terms that fit the requirements of our clients, from 20 days to 20 years and beyond.
Since inception in 2011, we have become one of the world’s largest providers of alternative working capital, specialising not just in SCF, but in providing bespoke finance solutions to companies internationally. The company is headquartered in London and has more than 290 specialists in New York, Chicago, Miami, Frankfurt, Bremen, Mexico City, Sydney, Johannesburg, Singapore and São Paulo.
Greensill is transforming finance so our clients can transform the future.
"Greensill is all about the democratisation of capital… We believe every company has the right to working capital as this oils the wheels of global business."
What is supply chain finance?
Essentially, supply chain finance, or SCF, enables any supplier, from small and medium-sized enterprises (SMEs) to large multinationals to get invoices paid instantly. To do this the supplier sells its invoices to a SCF provider as they are approved by the buyer. That allows the buyer to pay later and the supplier to secure its money earlier.
Imagine a person stuck in the desert dying of thirst. All he needs is water. We will deliver 99 bottles of water to that man right now, whereas the big banks would tell him: “You can have 100 bottles of water, but fill out these papers and we will get it to you in three to six months.” I think we all know what would happen to the man in the desert.
That’s the predicament many SMEs find themselves in today. If only they had access to cheap, safe and fast-working capital, their businesses would be much healthier, more profitable and less likely to go bust.
What does Greensill do differently?
Firstly, we are financially robust. We own our own bank, based in Germany, and we have SCF funds with a combined $5 billion under management. Most companies that operate in the fintech space or in SCF do not have that kind of underpinning. Then our model uses the capital markets to package up the invoices we acquire into bonds and sell them to investors. Our approach is simply better for our clients because it is faster, cheaper and easier to access. This flexibility enables them to fund their suppliers while maintaining healthy levels of working capital.
What is Greensill’s innovative approach to working capital finance?
Greensill’s expertise enables us to anticipate challenges and develop solutions as they occur. We anticipate problems and work with companies to provide different financing options.
We are always looking ahead, asking ourselves how we can further revolutionise SCF. We are doing that now using big data analytics.
Our innovative and technology-driven approach has enabled us to provide a diversity of products and solutions for our clients. For example, Greensill has recently enabled companies to finance more than $2 billion of acquisitions across multiple sectors.
We have assisted Boeing and Marsh develop an entirely new means of financing aircraft purchases and take advantage of a gap in the market left by the US and European export-import banks. Greensill also worked with long-time client Vodafone to unlock hundreds of millions of dollars to finance the purchase of mobile phone handsets.
What Greensill projects are changing finance to change the world?
With our new way of financing handsets, we are helping people in remote parts of Latin America to connect to the mobile economy in a way that was previously impossible.
We are also protecting vital front-line healthcare in the UK. High street pharmacies play an essential role in communities, but have been hampered by slow government payments. Greensill’s tech-driven £1-billion SCF programme with the Crown Commercial Service ensures prompt payment every time.
Meanwhile in Australia, we are working on a plan we hope will level the playing field for indigenous people in a competitive global landscape.
What is your partnership with General Atlantic?
Growth equity firm General Atlantic last year made a minority investment in Greensill, continuing its strategy of supporting companies that use technology to disrupt the financial system. The firm is our first institutional investor and invested $250 million, valuing Greensill at $1.64 billion. This gives us access to a wealth of expertise, both at General Atlantic and among its stable of portfolio companies, as well as opportunities to enter important markets such as China, India and Brazil.
For more, see Raconteur’s full coverage of Greensill.