As fairytales go, Lex Greensill’s meteoric rise wasn’t your classic rags to riches story.

Hailing from the rich red soils of Bundaberg, he learned first-hand how to turn a small family farm into a world class business in a hugely competitive market.

Two decades ago, when he swapped the 2,000-hectare farming juggernaut for London and a career in banking after a stint at a local solicitor, there was little indication of the impact he would have on global finance. Or the crisis he would create.

A visitor to Buckingham Palace, where he was awarded a CBE, feted by 10 Downing Street and an advisor to Barack Obama, Greensill carved himself a niche role that, until recently, valued his eponymous firm at more than $9 billion.

Last year, it engaged in $143 billion in financing for 10 million customers in 175 countries.

Now it is on the ropes as the 43-year-old Greensill desperately tries to stave off a collapse that threatens the livelihood of thousands and could ricochet from London to Bremen and all the way to Whyalla, the home of Australia’s second biggest steelworks.

The Whyalla Steelworks directly employs 6 per cent of the city’s population.(

ABC News: Matt Coleman


The rise and fall of a financial engineer

A little over a decade ago, the global economy was left teetering on the brink of destruction after the world’s brightest minds applied their talents, not to exploring the realms of the universe or ridding the world of disease, but to create ever more elaborate means of gambling.

In a world awash with excess cash and capital, they plunged into the murky realms of securitisation, creating evermore exotic and ultimately toxic financial instruments.

Lex Greensill visited Buckingham Palace and offered advice to Barack Obama as his empire grew.(

Supplied: Greensill Farming Group


They allowed the banks to borrow and bet on almost anything. The asset du jour pre-2008 was a shaky boom in American real estate. Credit default swaps, synthetic derivatives and a host of other complex investments all conspired to obscure the extent to which debt had permeated the system, until the system cracked and then crashed.

If anything has changed since then it is that there is vastly more debt at household, corporate and government levels. And with vast trillions of dollars in stimulus coursing through the financial system and interest rates at zero, a new generation of nimble minded geniuses have applied themselves to carving off a slice for themselves.

Grensill’s grand plan was innovative and yet well established, extremely complex but based upon a simple principle, incredibly lucrative and yet deeply flawed.

For several years, during the worst of the financial crisis, he worked for a couple of major investment banks in London. His specialty was what’s known as “supply chain financing”. Essentially, he was providing finance to the suppliers of big corporations.

It’s an age old idea that normally is called factoring. If you’re a supplier, instead of waiting 90 days to be paid by a big company, a financier will advance you a slightly smaller amount of cash immediately and then pick up the payment in full down the track, thereby making a small return for themselves.

When he struck out on his own in 2011, Greensill altered the model ever so slightly. The supplier was still paid at a slight discount, but the debt was owed by the company instead of the supplier, and that simple shift allowed the company to extend and alter the repayment terms without it appearing as though it was taking on more debt.

Lex Greensill and his family in Bundaberg.(

Supplied: Greensill Farming Group


To finance this, Greensill bundled these debts together — just as was done in the lead up to the GFC — sliced them up into portions and sold them off to investors.

The returns were attractive in a zero interest world, and to add an element of safety to the whole thing for investors, he insured the debt bundles.

Everything went swimmingly until last year. That’s when the flaws became obvious.

Instead of vast numbers of suppliers, the clients were a smallish number of large corporations. There wasn’t enough diversity to spread the risk, and when a few UK companies experienced difficulties in a COVID induced crisis, the insurers had to cover the losses.

The banks then realised some of these corporations were carrying far more debt than they’d disclosed, the insurers became twitchy about extending policies and the investors, sensing greater risk than they’d anticipated, began to back out.

That’s when the whole scheme began to unravel. A fortnight ago, one of the biggest insurers for the scheme declined to renew policies over $US4.6 billion worth of investments and the investment banks directing clients to stump up the cash pulled the plug.

The Greensill-Gupta partnership

Here at home, Greensill had an impressive client list.

Telstra and construction giant CIMC were there. So too was an organisation called the GFG Alliance, a loose group of companies controlled by UK magnate Sanjeev Gupta.

In 2017, as part of an international buying spree, Gupta’s company bought the Whyalla steelworks in South Australia which had imploded under a mountain of debt the previous year. It employs around 6,600 Australians with mini-steel mills in Sydney and Melbourne and metal recycling.

Primarily a commodities trader at the turn of the century, Gupta snapped up ailing power, steel and aluminium plants in the UK and across Europe before expanding into renewables and now operates in 35 countries with a 35,000 strong workforce.

Privately owned, it has been difficult to get a handle on the group’s finances or how Gupta has managed to turn a collection of ailing businesses into a money spinner. Often the purchases have been completed with government finance or concessions and usually with a promise of turning dirty old industries like steelmaking into “green” enterprises.

For the past few years, one of his biggest financiers was Greensill Capital, although the exact nature of the relationship is difficult to pin down. Both, however, have ridden an extraordinary wave of success together.

A fortnight ago, reports in some UK newspapers suggested difficulties within GFG, claims that have been refuted by the group. In response, the German banking regulator froze the operations of Greensill Bank, a small Bremen based band the financier had bought.

The regulator was concerned the bank was over-exposed to GFG and investigations last week left it dissatisfied about the status of receivables from GFG along with reports that it referred some matters to the courts.

Whyalla on the ropes again?

Whyalla, South Australia’s fourth biggest city, boasts a population of a little over 20,000. The steelworks, once owned by BHP before being hived off into a standalone company, directly employs about 6 per cent of the town, but a large proportion of other businesses in the town rely upon the operations.

When Arrium, the company that owned the steel operations, collapsed in 2016, shockwaves ran all the way through to Canberra. With an election just three months away, the federal government pulled out all the stops in a bid to save the operation.

Sanjeev Gupta’s arrival as saviour was as unexpected as it was welcome. In recent months, however, the British steelmaker in his GFG Alliance announced plans to lay off more than 350 workers due to “challenging conditions”, but the founder denied similar moves were afoot in Australia.

By that stage, Greensill Capital behind the scenes was experiencing severe difficulties and Greensill reportedly was scouting around for finance to keep his empire afloat, including plans for a stock exchange listing.

Last week, there were reports GFG had suspended repayments to Greensill Capital. That followed court action by Greensill earlier in the week to take security over shares in GFG’s Australian steelmaking operations, an aggressive move that would deliver it some protection if things went pear-shaped.

The partnership that had driven the mutually beneficial ambitions of the pair finally had ruptured.

The exact financial relationship between the two groups, and the extent of their financial links, remains shrouded in mystery, but with Lex Greensill’s empire in ruins and major parts fighting to stave off insolvency in the coming week, Whyalla’s future could once again be under a cloud.