Demise of Financier Greensill Sparks Global Jobs Panic
London, March 10 (AFP/APP): The collapse of British finance firm Greensill has sparked panic and threatened 50,000 jobs, in particular at the sprawling steel empire of Indian-British billionaire Sanjeev Gupta.
Greensill specialised in short-term corporate loans via a complex and opaque business model that ultimately sparked its declaration of insolvency on Monday. The bankruptcy marks a major fall from grace for a company that won a key $1.5-billion investment from Japan’s SoftBank in 2019 — and employs former British Prime Minister David Cameron as advisor. Its demise has now created massive uncertainty for clients, who depended on its finance services to pay their bills and could now potentially default on payments and lead to further turmoil.
“For companies reliant on its service, the great scramble has begun to find other ways of covering the looming cavern in their finances,” said Susannah Streeter, an analyst with financial services company Hargreaves Lansdown. “Those investors who had bought the debt sold on the market are now staring at potentially big losses.”
Greensill’s failure has put 50,000 jobs at risk, both at the London-headquartered group and across its customer base. One that could be hit hardest is Gupta’s GFG Alliance empire, which has 35,000 staff worldwide, including Britain where its Liberty Steel division employs 5,000 people. Bloomberg news reported that Greensill had close links with Gupta, who told the financial news agency in October that it was the company’s biggest lender. Sanjeev Gupta himself met for “productive” talks with trade unions in Britain on Tuesday, GFC said in a statement.
The company is seeking “additional working capital facilities to support the business” and continues “to work closely with the unions and our employees to identify the most effective ways of supporting the business and preserving jobs”.
A Downing Street spokesman said the news “will be very worrying for employees”, adding that the UK government was following the matter closely. GFG also operates three large sites in France, comprising Ascoval steelworks, Hayange rail plant and an aluminium facility in Dunkirk. “We are obviously afraid of a domino effect … and the risks are high for jobs at the French sites,” said Stephane Destugues, an official at French trade union CFDT.
French Finance Minister Bruno Le Maire said Tuesday he was not worried about job losses at Ascoval and other industrial sites. Greensill crashed Monday into administration, or the process whereby outside expertise is called upon to minimise job losses, amid mounting doubts over the value of its assets. Administrator Grant Thornton is seeking to sell Greensill’s intellectual property and a technology platform for $60 million to private equity firm Apollo, according to a source close to the matter.
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