Lex Greensill eyes local listing for finance group

Billionaire Lex Greensill’s supply chain finance group is ‘carefully considering’ Australia for its multibillion-dollar sharemarket listing.

Greensill founder and chief executive Lex Greensill. Picture: Annabel Moeller

Billionaire Lex Greensill’s supply chain finance group is “carefully considering” Australia for its multibillion-dollar sharemarket listing as it works on a pre-IPO capital raising worth up to $US600m ($800m) that could value the company at $US7bn.

Greensill founder and chief executive Lex Greensill said the float, which could place Greensill among the top 50 companies listed on the Australian Securities Exchange, was now back on the agenda after earlier plans for a listing were derailed by the COVID pandemic.

The London-based former investment banker said the Australian economy had again proven its resilience during the pandemic, as it did during the global financial crisis.

“Australia is so well positioned. You asked me about our plans to become a public company. It is definitely the case that Australia is in the top three that we are considering as to where we would choose as our location, in no small part because Australia’s economy has proven yet again to be just so robust through COVID, which I think is a tremendous thing,’’ he tells The Australian.

Greensill is currently raising between $US500m and $US600m in a pre-IPO funding round, aiming for a $US7bn valuation on the company.

Greensill would not confirm the numbers, but says the raising should be completed in the first quarter of 2021 and has so far enjoyed strong demand, including from Australian investors.

Greensill has attracted backing from private equity firm General Atlantic, which invested $US250m in 2018, and Japanese conglomerate SoftBank’s Vision Fund, which invested nearly $US1.5bn last year. Greensill’s supply chain finance business specialises in paying the invoices of the suppliers of its clients promptly and collecting the money from the clients later, earning fees on the transaction and funding it via bond issues.

In Australia the use of supply chain finance programs by big listed companies CIMIC, Telstra and Rio Tinto attracted criticism from Small Business Ombudsman Kate Carnell, who argued that big companies were using the practice — also known as “reverse factoring” — to push out payment terms.

Greensill has defended its model as helping to improve the cashflow of small suppliers and has said it will refuse to do business with companies that misuse his products. Late last month CIMIC agreed to pay all of its suppliers within 30 days.

Greensill says the funds from the pre-IPO raising will be used for acquisitions and to expand his firms’ rapidly growing consumer business, which allows employers to give staff access to their wages during a pay cycle at no charge.

Greensill also wants to transform the way finance is provided to Australian farmers. He has argued that traditional funding models favoured by banks have left farmers with working capital deficits even though they have appreciating assets.

A report released by Greensill last year entitled “Farming and Finance” claimed the firm could leverage its technology platforms to unlock the value inherent in feedlotted herds and provide vital working capital to the farmer.

Previously they have only been able to do asset-based borrowing.  Greensill, whose family still runs a farming business in northern Queensland, said his firm provided $25bn of finance to the agricultural sector this year out of the $200bn loaned to customers and suppliers in more than 175 countries.

“We have really focused on using the massive amounts of data that we and the industry have gathered to deliver cheaper credit to farmers,” he says.

“We have executed deals with dozens of clients.

“We are partnering with some of the biggest companies in the world to offer new funding solutions direct through to farmers. It is tremendously exciting.

“In the same way we are the biggest financier of mobile phones in two dozen countries now, we think you will see a similar trend with our market position in terms of the agriculture space. Farming is part of our DNA and we have built a fantastic business around that.”

One of Greensill’s local partners in agricultural financing is the rich-lister Maloney family’s Tulla Group, which invests in small to ­medium listed companies, private equity, venture capital and debt.

Tulla owns 40 per cent of a business called Livestock Asset Management (LAM), which was established by ex-Macquarie Agriculture executive David Coupland. Mr Coupland co-owns and runs the business, which is chaired by Tulla Group patriarch Kevin Maloney.

LAM provides a high-tech reporting data and risk management platform to track livestock, while Greensill provides the lending book for the supply chain finance. The average loan ranges in size from $20m to $100m and the loan book is currently worth around $350m, with a pipeline of more than $200m for the next 6-9 months.

“If the current traction continues, it could be $1bn lending book within two to three years,” Tulla managing director Mark Maloney says. “The model is about providing flexible financial solutions that are transparent and low-margin for the agricultural community. We have found Greensill to be a very positive, constructive and collaborative partner to work with and we enjoy the relationship.”

While the venture currently finances mostly livestock in Australia, it is looking at moving into grains and other agricultural commodities in other geographies, especially the US.