, Columnist
Sanjeev Gupta and Greensill Became Their Own Worst Enemies
GFG Alliance’s excessive reliance on invoice-based lending is now being exposed.
Empire of steel.
Photo: Bloomberg
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Greensill Capital filed for insolvency this week and its biggest client, steel magnate Sanjeev Gupta’s GFG Alliance, is scrambling to avoid a similar fate. A relationship that benefited both firms has been torn asunder. Greensill has stopped funding GFG, and the metals conglomerate has in turn defaulted on monies owed to the London-based finance firm.
Their shared financial woes illustrate the danger of relying too heavily on one key client or funding relationship. They also underscore the riskiness and opacity of the type of financing both embraced: short-term invoice-based lending.