Market history · Private credit ·
Greensill Capital collapses
Greensill Capital, which specialised in supply-chain finance, filed for insolvency in the United Kingdom on 8 March 2021. Fortune reported that Credit Suisse had frozen, and then begun to wind down, about $10 billion of funds that held Greensill-linked notes; Credit Suisse then demanded repayment of a $140 million loan the firm could not pay, and German regulators closed Greensill Bank.
SoftBank's Vision Fund, which had put $1.5 billion into Greensill and had already written down its holding, was among the investors affected, as was the Swiss asset manager GAM, which began winding down a Greensill supply-chain fund of $842 million.
The episode showed how products that looked like short-term, low-risk lending could depend on one firm's survival, on insurance and on the ability of funds to meet redemption requests.
The takeaway
Short-term finance is only as safe as its weakest link. Dependence on one originator or one insurer is concentration risk.
Sources
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.