SoftBank Writes Down $1.5 Billion in Assets Related to UK Greenhill Capital

[Image source= AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] SoftBank reportedly recorded a $1.5 billion loss after investing in the UK financial investment firm Greensill Capital.

Bloomberg News reported on the 1st (local time), citing insiders, that SoftBank's Vision Fund wrote down $1.5 billion of Greensill Capital fund assets at the end of last year. The insider explained that SoftBank reduced the value of assets related to the Greensill Capital fund to nearly zero.

Bloomberg also reported that Swiss bank Credit Suisse froze assets of a $10 billion investment fund related to Greensill. Credit Suisse stated that due to significant uncertainty regarding the assets held by the Greensill fund, it suspended redemptions and subscriptions to the fund to protect investor interests.

Greensill Capital is a financial company founded in 2011 by Australian-born asset owner Rex Greensill. Greensill Capital specializes in Supply Chain Finance. Supply Chain Finance is a business that helps companies procure parts or raw materials at lower costs and provides funding support. Greensill Capital operated its business by directly lending money through a bank in Germany or by pooling bonds of companies that borrowed parts or raw materials into a single investment product, then receiving investments from entities such as Credit Suisse and SoftBank Vision Fund.

Last year, significant losses reportedly occurred in the fund assets due to defaults by Greensill Capital’s client companies. Amid this, SoftBank was confirmed to have made an additional $500 million investment in the Greensill investment fund in June last year. Credit Suisse conducted a thorough investigation of the Greensill fund after SoftBank’s additional investment, concluding that SoftBank’s additional investment indicated problems with the assets held by the Greensill fund.

This is the second case of problems related to Greensill investment funds in Switzerland. Previously, in 2018, asset management company GAM liquidated a fund invested in Greensill. The fund liquidated by GAM at that time held numerous bonds of a company operated by Sanjeev Gupta, chairman of the UK mining company Liberty House. The fund whose assets Credit Suisse froze this time is also known to hold bonds of Gupta’s company. The German Financial Supervisory Authority (BaFin) also demanded last year that Greensill Bank reduce loan assets related to Chairman Gupta.

According to insiders, Credit Suisse is considering various measures such as liquidation and conversion of equity for the fund whose assets have been frozen.

Greensill Capital confirmed Credit Suisse’s freezing of fund assets. Additionally, it announced that it is negotiating with private equity firm Apollo Capital Management to resolve the liquidity crisis.

This content was produced with the assistance of AI translation services.