Apollo Global Management’s plan to buy parts of stricken finance firm Greensill Capital out of administration is on the verge of collapse, according to people familiar with the matter.
The US private equity firm has halted talks to buy parts of Greensill due to an escalating stand off with a key technology provider to the once high-flying supply chain finance group, the people added.
US technology company Taulia, which provides the digital platform most of Greensill’s customers use to manage their working capital, is now looking to move its users to other providers, primarily the US bank JPMorgan, the people added.
Taulia told the Financial Times that its clients wanted “flexibility in the source of funding”.
“Following the recent, well-documented challenges faced by Greensill we have been working to ensure that our clients have continued choice over their funding sources and continuation of funding,” the company added.
Apollo and JPMorgan declined to comment. Greensill declined to comment.
Apollo was only interested in acquiring those parts of Greensill that would give it access to financing lines with large companies such as telecoms group Vodafone. The group had no interest in taking on any financing for Greensill’s largest customer, industrialist Sanjeev Gupta’s GFG Alliance, people familiar with the matter have said.
If the talks with Apollo, which this week struck a $29bn deal to merge with insurance affiliate Athene, cannot be revived, Greensill appears to have few options.
Greensill disclosed in its administration filing earlier this week that Apollo had offered $59.5m for its intellectual property and IT systems, which would have involved it taking on “the majority” of the more than 500 employees of its UK business. The US group was “the only credible bidder”, court documents said.
A failure by Apollo to strike a deal would highlight Greensill’s heavy reliance on other companies’ technology platforms, even though founder Lex Greensill frequently touted his company’s prowess in “artificial intelligence” and “machine learning”.
Taulia for years had an exclusivity agreement with Greensill, but that expired at the end of 2019. In April last year, the San Francisco-based company announced what it termed a “strategic alliance” with JPMorgan, to match up its technology platform with the bank’s funding.
High profile technology investors such as SoftBank’s $100bn Vision Fund poured money into Greensill, cementing its status as one of the world’s most valuable fintechs.
General Atlantic, known for its early backing of financial technology success stories, lauded Greensill’s technological savvy, when the US venture capital firm invested $250m into the company in 2018.
At the time, General Atlantic’s co-president Gabriel Caillaux praised Greensill’s “fully integrated technology and funding solutions”, as well the company’s “competitive advantage” in the supply chain finance market, where companies effectively borrow money to pay their suppliers.
Despite the reliance of Greensill on another company’s technology, Apollo still believed the deal was likely to proceed until recently.
The US private equity firm’s lawyer said in court on Monday that while there were a “few issues to resolve”, it’s negotiations were in the “final stages” and should have been “completed shortly”.
Bloomberg first reported that Apollo’s talks with Greensill could collapse.