What's going on?
Japanese conglomerate SoftBank flopped out its massive checkbook again on Monday and plowed $800 million into British financial technology firm Greensill.
What does this mean?
Greensill specializes in “supply chain finance” – buying outstanding invoices from companies awaiting payment and packaging that debt for sale to investors as bonds. The company short on funds gets paid sooner, and cash from the firm due to foot the bill is used to pay bondholders. The risk for those in the market is, of course, that there’s no guarantee an invoice will be paid when the time comes…
SoftBank reportedly snatched a 15-20% stake in Greensill, valuing it at $3.5 billion – more than double its worth a year ago when American group General Atlantic bought in. But Greensill has courted controversy since then. Bad behavior unearthed last year led investors’ cash away from the Swiss investment manager GAM that helps look after those Greensill bonds, dragging demand for them down too.
Why should I care?
For markets: Softbank likes hard tech.
SoftBank’s $100 billion Vision Fund famously invested in tech firms WeWork, DoorDash, and Uber. And in the UK, SoftBank’s been on the prowl for fintechs: in February, it put $400 million in British digital bank OakNorth. SoftBank’s probably hoping its other Vision Fund investments rally after its shares were run over by Uber on its Friday stock market debut – and by a broader malaise settling in among investors now that China has retaliated against American import tax hikes.
The bigger picture: Everybody wants a piece of fintech.
Fintech spans huge markets, from supply chain finance (estimated at $55 trillion) to consumer finance and payments – which makes it tempting prey for firms like SoftBank looking for fast-growing companies to back. Fintechs cater to just about everything, including investing – and with more services becoming available, seeing what other Finimizers think of them might help 😉