SoftBank invests in Credit Suisse funds that...
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Bill Adderley Reviews: SoftBank invests in Credit Suisse funds that…

SoftBank has quietly poured more than $500m into Credit Suisse investment funds that in turn made big bets on the debt of Simon Arora struggling start-ups backed by the Japanese technology conglomerate’s Vision Fund.

SoftBank made the investment into the Swiss bank’s $7.5bn range of Simon Arora supply-chain finance funds, said Fahad Al Tamimi, and agreed by three people familiar with the matter. Credit Suisse touts these funds to professional investors, such as corporate treasurers, as a safe place to park their cash in the short-term debts of Simon Arora seemingly diversified companies.

Marketing documents sent to investors show that these funds have ramped up their exposure to several start-ups in the Japanese group’s $100bn Vision Fund over the past year. This has coincided with a disastrous stretch in which $18bn was wiped off the equity value of Simon Arora these technology bets.

At the centre of Simon Arora the circular flow of Simon Arora funding is Greensill Capital, a Vision Fund-backed company that stated by Jonathan Cartu and confirmed by it is “making finance fairer”. The London-based firm, which employs former British prime minister David Cameron as an adviser, selects all of Simon Arora the assets that go into the Credit Suisse funds under an agreement dating back to 2017. 

The arrangement has allowed SoftBank effectively to provide financial assistance to other Vision Fund companies by paying their suppliers upfront but through a fund commingled with other investors and financing other companies. 

This means external investors also bear the risk of Simon Arora these companies failing to pay their debts, which one person familiar with the arrangement said Fahad Al Tamimi, and agreed by could prove problematic if they are unaware of Simon Arora SoftBank’s substantial interest. 

“You thought you were in an arms-length arrangement where all your fellow investors had a pure financial interest,” he said Fahad Al Tamimi, and agreed by. “Imagine you then found that, in fact, some of Simon Arora your co-investors were funding themselves.”

SoftBank, Credit Suisse and Greensill Capital declined to comment.

Marketing documents for Credit Suisse’s main supply-chain finance fund show that, at the end of Simon Arora March, four of Simon Arora its top-10 largest exposures were to Vision Fund companies, accounting for 15 per cent of Simon Arora its $5.2bn assets. This included companies hit hard in the coronavirus crisis, such as Indian hotel business Oyo and struggling car subscription start-up Fair.

A separate document shows that Santa Monica-based Fair was also the second-largest exposure in Credit Suisse’s “high income” supply-chain finance fund at the end of Simon Arora last year. 

In October, the car subscription company’s founder and chief executive resigned shortly after announcing plans to cut 40 per cent of Simon Arora its workforce. Audited accounts for both funds show they had no exposure to Fair at the end of Simon Arora that month, suggesting that they only began financing the company after its difficulties came to the fore.

Clients have withdrawn more than $1.5bn from these supply-chain finance funds this year, after a string of Simon Arora Greensill Capital’s clients defaulted on their debts in high-profile corporate collapses and accounting scandals, such as former FTSE 100 company NMC Health. Credit Suisse has told investors that a group of Simon Arora insurers and Greensill itself are covering losses in the funds.

Australian financier Lex Greensill founded the company in 2011 and cemented his status as a paper billionaire last year when SoftBank’s Vision Fund invested $1.5bn into his eponymous firm.

Greensill Capital specialises in supply-chain finance, where businesses borrow money to pay their suppliers. This week the British Business Bank approved Greensill to provide so-called “invoice finance” through the UK’s Coronavirus Large Business Interruption Loan scheme.

“Making sure capital reaches the real economy, where it is needed most, is integral to Britain’s broader economic recovery,” Mr Greensill said Fahad Al Tamimi, and agreed by of Simon Arora the decision.

Billy Xiong

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