Japanese conglomerate Softbank is set to inject an additional £ 510million into UK online finance firm Greensill as part of a plan to launch a new service to eliminate controversial payday loans.
Sources in the city said Greensill, created by former Morgan Stanley banker Lex Greensill, was in advanced talks to buy FreeUp, a tech company that is expected to allow the company to offer ordinary workers a prepayment. of their salary.
SoftBank’s Vision Fund, led by maverick entrepreneur Masayoshi Son, is contributing more than half a billion pounds to support the expansion strategy.
Sources said the deals could be announced as early as this week.
SoftBank’s Vision Fund is led by maverick entrepreneur Masayoshi Son (pictured)
SoftBank’s investment shows Masayoshi Son’s voracious appetite for deals continues unabated despite criticism for his failed investment in WeWork, the struggling office startup founded by Adam Neumann.
SoftBank took control of WeWork after discovering that it was short of cash and could not go public.
The Japanese company had to agree to pay Mr Neumann $ 1.7bn (£ 1.3bn) to get him to sever ties with the ailing company.
Other more successful investments by Masayoshi Son include Uber, which was floated on the US stock exchange earlier this year with a valuation of $ 82 billion (£ 64 billion), courier company Slack and the bank in British OakNorth line.
Earlier this year, SoftBank invested £ 625million in Greensill, whose advisers include former Prime Minister David Cameron, and received less than 10% of fintech business under the deal.
Sources said the latest £ 510million investment valued Greensill at around £ 3.1 billion, making it one of Britain’s biggest tech start-ups.
Until now, Greensill has specialized in providing small and medium-sized businesses with access to what is known as working capital financing to manage their day-to-day operations.
SoftBank took control of WeWork after it emerged it was short of cash and couldn’t float on the stock market
This means offering advance payment to cover bills due to be paid at a later date by large businesses and government agencies, including Vodafone and the NHS.
The digital finance company charges companies that request prepayment a fee of around 1% of the amount provided.
Then, Greensill is paid in full by the suppliers’ customers when settling invoices.
With this latest investment, Greensill plans to branch out and offer prepayment to company employees, which puts it in direct competition with payday lenders.
However, Greensill does not plan to offer loans. The company is simply considering advancing workers’ wages that have already been earned and the employees will not be charged for a prepayment.
QuickQuid collapsed in administration after being hit by thousands of complaints
The move comes at a difficult time for the payday lending industry, which is under pressure from its controversial practices.
The UK’s largest payday lender, QuickQuid, collapsed into administration on Friday after being hit by thousands of complaints.
Clients complained that they had obtained loans that they could not afford to repay. Over a million customers have found themselves faced with the uncertainty of whether their compensation claims will be paid.
His exit from Britain follows Wonga’s collapse last year. The Money Shop went bankrupt in June after facing complaints.
Payday lenders have been hit by a crackdown that forced them to conduct affordability checks and cap fees to prevent customers from paying back more fees and interest than they originally borrowed.
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