Softbank ramps up investment in finance firm Greensill as it swoops on payday lending
Softbank has injected a further $655m (£511m) into Greensill as the online finance firm announced a fresh acquisition that could kill off payday lenders.
Greensill, which was set up by former Morgan Stanley banker Lex Grensill, has acquired Freeup, a London tech startup designed to offer employees early payment of their salaries.
Read more: Softbank boss Masayoshi Son ’embarrassed’ by track record
Softbank’s tech-focused Vision Fund is pumping in additional funds to support the deal, as well as further acquisitions and global expansion plans. It comes after an initial $800m investment from the Vision Fund in May this year.
Greensill’s current focus on supply chain financing allows a company’s suppliers to secure early payments to cover invoices. The firm is now hoping to extend this to a company’s employees.
Freeup’s technology enables workers to receive early payment for earned but unpaid wages at no additional cost. Companies would pay to use the platform, allowing them to offer the system to employees as a perk.
“Essentially, all workers are suppliers – supplying their employers with their time and skills,” boss Lex Greensill said. “There is effectively no difference between our firm making an early invoice payment and making an early salary payment.”
Greensill has raised more than $1.7bn from investors in the last 14 months, and the latest funding will take its valuation to just shy of $4bn.
The fresh investment may signal renewed confidence for Softbank’s troubled investment arm.
The Vision Fund, led by Masayoshi Son, has been left reeling from the saga surrounding troubled office space provider Wework – one on its largest bets.
Softbank has now seized control of the company, ousting founder Adam Neumann in the process. However, the deal is thought to value Wework at just $8bn, a fraction of its previous valuation of $47bn, or the $20bn price tag it sought in its botched stock market listing.
Aside from damaging Softbank’s reputation, the Wework debacle is believed to have threatened the company’s ability to raise funds for its second Vision Fund.
Yet the further investment in Greensill may indicate that Son, who has also backed Uber and Slack, is looking to shake off doubts about his appetite for big deals.
Read more: Softbank seizes control of Wework
The deal could also sound the death knell for the payday lending industry, which has been rocked by controversies over its sky-high interest rates.
Quickquid, the UK’s largest payday lender, last week collapsed into administration amid increased pressure from financial regulators. Its demise comes a year after the collapse of rival Wonga, which was overwhelmed by customer compensation claims for irresponsible lending.
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