Bil­lion­aire tops big four banks for short-term lend­ing

The Weekend Australian - - BUSINESS REVIEW - DA­MON KITNEY

One of the na­tion’s newest bil­lion­aires wants to work with lo­cal su­per­an­nu­a­tion funds to help lend more short-term money to small and medium busi­nesses, as his sup­ply chain fi­nance busi­ness has ex­pe­ri­enced booming growth in Aus­tralia fol­low­ing the bank­ing royal com­mis­sion.

Lex Green­sill, the Lon­don­based founder of Green­sill Cap­i­tal, said that in the first six months of this cal­en­dar year his firm did four times the busi­ness in Aus­tralia that it did all of last year.

It has now pro­vided more than $3 bil­lion to a group of more than 25,000 SMEs in Aus­tralia and moved to usurp the role of the big four banks in pro­vid­ing short­term, sup­ply-chain fi­nance to busi­ness.

“Through a com­bi­na­tion of tech­nol­ogy and ser­vice and great peo­ple, we have eroded the hold that the big four have on the mar­ket­place to the point that we are the big­gest provider in the Aus­tralian mar­ket,’’ Mr Green­sill told The Week­end Aus­tralian.

“It comes down to the fact we have been pre­pared to in­vest in the tech­nol­ogy in how we in­te­grate to our cus­tomers and the cap­i­tal mar­kets to de­liver that ul­tra-cheap cap­i­tal to small busi­nesses in Aus­tralia. I don’t know if our in­crease is a prod­uct of the banks’ prob­lems or our great ser­vice.”

Sup­ply-chain fi­nance is a way for big cor­po­ra­tions to use cash sup­plied by third par­ties — it used to be banks, but now in­creas­ingly fin­tech com­pa­nies like Green­sill are us­ing the cloud to of­fer new forms of fi­nance — to pay their sup­pli­ers early.

As a re­sult, the sup­pli­ers (usu­ally SMEs) get faster ac­cess to the money they are owed, giv­ing them more cash on their bal­ance sheet, while the big com­pany gen­er­ally gets more time to pay its sup­plier.

Last year Green­sill backed the $700 mil­lion pur­chase of steel­maker Ar­rium by the Lon­don­based Lib­erty House Group. It also fi­nances the hand­sets for mo­bile phone gi­ant Voda­fone in Aus­tralia.

In July, Green­sill re­ceived a strate­gic $US250m ($350m) in­vest­ment from global pri­vate eq­uity firm Gen­eral At­lantic, which val­ued the fi­nance firm at

$1.64bn and made Green­sill and his brother Peter — who runs the fam­ily’s Green­sill Farm­ing op­er­a­tion in Bund­aberg — bil­lion­aires overnight.

The fund­ing will help the firm ex­pand into China and In­dia. It re­cently es­tab­lished an of­fice in Sin­ga­pore.

Green­sill’s lat­est accounts lodged with the Aus­tralian Se­cu­ri­ties & In­vest­ments Com­mis­sion re­vealed it made a $20m profit in the year to De­cem­ber 31, 2017. This com­pares with a $62m loss for 2016.

Last year’s re­sult was struck on rev­enue of $138m, com­pared with $56m a year ear­lier.

Since it was founded in 2011, Green­sill has fa­cil­i­tated pay­ments to 1.5 mil­lion sup­pli­ers and pro­vided more than $US40bn of fi­nanc­ing across 50 coun­tries, the money com­ing from the Bre­men-based Green­sill Bank (known as Nord Fi­nance Bank be­fore it was bought by Green­sill in 2014) and four fi­nance funds run by in­ter­na­tional in­sti­tu­tional in­vestors.

“We have tried at var­i­ous points in the past to work with su­per­an­nu­a­tion firms and Aus­tralian in­vest­ment man­agers,” Mr Green­sill said. “They have been cau­tious in terms of their will­ing­ness to look at what ap­pears on its face to be a new as­set class.”

He said he was open to work­ing more with lo­cal su­per funds, es­pe­cially as Green­sill grows into more long-dated trans­ac­tions such as the Ar­rium deal.

“When you think about the pro­file of a su­per fund, it doesn’t match ours. While we do pro­vide some long-term cap­i­tal to cus­tomers, the bulk of our busi­ness is short-term cap­i­tal … How­ever as we have grown into do­ing more long-dated trans­ac­tions, it be­comes far more ap­pro­pri­ate for them to work with us.”

He said that as the fi­nanc­ing of small com­pa­nies moved away from the big banks, it was “nat­u­ral and ap­pro­pri­ate there will be a role for su­per funds to par­tic­i­pate more”.

A re­cent pa­per by In­dus­try Su­per Aus­tralia chief econ­o­mist Stephen An­thony ar­gues that in the right cir­cum­stances, su­per­an­nu­a­tion funds could pro­vide cap­i­tal for growth to SMEs and busi­ness more gen­er­ally, com­ple­ment­ing more tra­di­tional cap­i­tal sources such as banks.


Lex Green­sill at the fam­ily farm in Bund­aberg

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