Lex Greensill’s work in government was getting him noticed and earning him status. But it wasn’t making him rich.
Greensill Capital had launched in 2011, partly funded by watermelons. Lex and his youngest brother, Peter, had struck a deal that saw Peter – who was building a farming business – get a stake in Greensill Capital and Lex get access to some watermelon revenues to kickstart his company. But he needed more.
Lex gradually collected a coterie of wealthy patrons. Perhaps the most important of these, in money terms at least, was John Gorman, a US entrepreneur involved in property, financial services and agriculture. Gorman had been director at a Chicago-based bank and co-owned a construction company.
One of Gorman’s businesses was selling farming equipment and supplies. He found himself pitching agricultural equipment to Peter, who explained what his brother Lex was up to. Gorman invited Lex to Florida, where he owned an expansive waterfront property. Lex turned on the charm and explained his vision of a global supply chain finance business. By the end of their meeting, instead of Gorman selling tractors to Greensill Farming Group, Lex had persuaded the veteran businessman to invest in Greensill Capital. The company’s accounts show that Gorman, who joined the Greensill board, loaned the company about $24 million.
Others soon followed. Like Gorman, several of the early Greensill backers had Chicago connections.
David Solo is a quiet, introverted MIT graduate and computer scientist. He had started out at O’Connor Associates, a fabled Chicago options trading firm founded in the 1970s and renowned as a stable for maths whizzes, many of whom came to dominate derivatives trading in the decades that followed. O’Connor was bought in the late 1990s by Swiss Bank Corporation (which later became the giant Swiss bank UBS). There, for a time, Solo was a star and protégé of the top management. He helped resolve the mess left behind by UBS’s ill-fated investment in the hedge fund Long-Term Capital Management, whose near-collapse in 1998 sparked genuine fears of a global financial meltdown. He was also at the forefront of the development of the market for credit default swaps, a kind of financial contract that offers protection against the possibility a borrower will default on loan payments. A 2008 column in the Financial Times by the journalist John Gapper describes a meeting with Solo where he began drawing diagrams of how ‘loans might be priced like swaps and options and be traded by banks and investors . . . There was no obvious reason banks had to make loans and hold them until maturity, taking the entire risk of borrowers defaulting. Instead, he and others in the credit derivatives market reasoned that banks could originate and trade debt, using swaps and options to transform it into securities. Banks would take less credit risk and use up less of their precious capital while investors would get a new way to make money. Everyone would be happy.’
A few years later, the same ‘everyone wins’ pitch was standard Greensill methodology. Solo had also accumulated a significant amount of personal wealth. At UBS, he had run Global Asset Management (GAM), an asset manager the bank owned that had been set up twenty-five years earlier by famed investor Gilbert de Botton, the father of author Alain de Botton. Over a few years, GAM was sold by UBS to another Swiss bank, Julius Baer, and then spun out of Julius Baer as a separate company. Solo and a couple of other senior GAM insiders made a fortune along the way.
He was an odd CEO. Incredibly shy, Solo hated the limelight and shunned large company-wide meetings. He was nicknamed the ‘Phantom of the media’, according to a profile on Swiss news site Finews. Equally, he was super-smart, perhaps one of the biggest brains in asset management. Solo’s mind seemed to work faster than everyone else’s. He seemed to know what you were about to say even before you said it. In September 2014, around the time he met Lex, GAM announced Solo was leaving the company.
Greensill’s supply chain finance ideas were right in Solo’s wheelhouse. He became a Greensill director and backed Lex financially too. Solo, a jazz fan, set up an offshore company called Ratamacue – named for one of the foundation techniques of jazz drumming – which gave Greensill a loan of about $10 million.
Another early backer was Patrick Allin, a Canadian tech entrepreneur and accountant. Allin worked at PricewaterhouseCoopers for years and then became co-founder and CEO of Textura, a Chicago-based business that sold billing software to the construction industry. He made a fortune when Textura first went public and then sold out to software giant Oracle for about $660 million. Along the way, Allin was also accused of securities fraud by a well-known stock researcher called Andrew Left. An article on Left’s website, Citron Research, described the behaviour of Allin as ‘The Wolf of Wall Street meets American Hustle meets The Sting’. In particular, Left had taken issue with the way Textura had recorded revenue, and he called out Allin for not disclosing in his corporate bio that he had also been CEO at a failed company called Patron Systems. Textura had denied the allegations of wrongdoing, but the stock price took a beating. Allin was replaced as CEO in 2015 and left the company. When the Oracle acquisition happened, he still had stock worth tens of millions of dollars.
Mickey Carusillo was another ex-O’Connor trader. Carusillo had managed bond and equity trading before the Chicago firm was taken over. Since then, he’d spent decades amassing a fortune as a partner in a so-called proprietary trading firm. Carusillo appeared in a 2019 article in the US business magazine Crain’s as he was trying to sell his 4,300 square foot Chicago apartment for $4.3 million. ‘We’re only using this place about four months out of the year,’ he said, explaining that he and his wife spent most of their time at their Florida home. The Carusillos loaned about $10 million to Greensill, the company’s accounts showed.
There was an additional loan of around $10 million from Ronald Ferrin, another Chicagoan and a connection of John Gorman’s. The two were co-owners of a real-estate business called Fairmac Realty. Ferrin and Gorman had also once held a substantial stake in AMC Entertainment, the US movie theatre chain.
Other backers had met Greensill through his time at the banks. David Brierwood, who’d opened a path for Lex from Manchester Business School to Morgan Stanley, continued to be supportive. Brierwood had been a director at Greensill Capital since 2015; even before that, in 2014, his family had loaned Greensill about $10 million.
Maurice Thompson, the former head of Citigroup in the UK, was also on board. Thompson had become chairman of Greensill Capital. The accounts show that in 2014 he and his wife loaned the company about $7 million.
Many of these backers also invested in Greensill’s equity too, putting millions more into Lex’s company. By 2016, these Greensill fans had sunk about $100 million into the business in aggregate. Mainly through word of mouth and smooth networking, Lex had managed to accumulate a significant pool of funds.
IN THE YEARS immediately after the financial crisis, I came across many bankers who’d become disillusioned with the industry. The constant upward trajectory had ground to a sudden, bone-jangling halt. Occupy Wall Street protesters and images of laid-off bankers carrying files out of their former offices had perhaps left a mark deep in the consciousness. It was especially true for younger bankers. Many of them felt let down by the big banking corporations that squeezed all the juice out of their staff – albeit paying them handsomely – but weren’t loyal when it mattered.
It was not exactly idealism or a spirit of fairness that drove them out. Rather some bankers began to believe that you could remake the financial world in a way that was more efficient and would take advantage of modern technology. There was a sense that this would be easier in a new financial start-up than in the legacy banks. And it might be possible to get a stake in one of these new businesses that could pay rich dividends down the line.
I knew lots of bankers who ditched their old roles and joined a start-up. There were a fair few senior executives who took a role at these new businesses too. It became a running joke that former CEOs of the biggest banks in the world were no longer playing golf. They were joining fintech company boards.
This was the world into which Greensill Capital was born. Lex had his backers – a collection of his former banking bosses and the wealthy Chicago connection. He also managed to persuade a handful of former colleagues to join the new company.
Roland Hartley-Urquhart – Lex’s colleague at Morgan Stanley and Citi – was a relatively seasoned banker. Though he was well liked, Roland’s career had mostly been in a much lower gear than Lex Greensill’s. Nevertheless, Roland was fabulously wealthy. The American had neither earned nor inherited most of his fortune. He’d married it. Roland’s wife was Jessica Nagle, who had co-founded the financial analytics company SNL Financial in 1987. SNL had grown from just a handful of employees in a New Jersey office block to having more than 3,000 staff around the world, and was eventually sold to McGraw Hill and Standard & Poor’s for $2.2 billion. Nagle had become fabulously rich along the way. Roland and Jessica lived the high life, socializing on board yachts or at fashionable Hamptons parties. The couple were photographed in the society pages of coffee table magazines aimed at New York’s elite. They were so rich, Greensill insiders joked, that even their dogs had accounts with private airplane company NetJets. Roland had never needed the roles at Morgan Stanley or Citi. Greensill was an opportunity to build something more meaningful.
Others had long-standing, personal connections to Lex. Chris Bates and Jason Austin were long-time colleagues, and about as close to true friends as anyone Lex knew. They were all in. Dave Skirzenski was another former Morgan Stanley and Citigroup colleague with a track record in trade finance. Jonathan Lane was an ambitious lawyer who gave up a career at Accenture to join Greensill Capital.
Lex had funding. And now he had a team.
Solo was especially helpful in opening doors with a couple of big asset managers. Thompson helped introduce Lex to the investor General Atlantic. The board might meet at Thompson’s London club or they might get together at Hartley-Urquhart’s house in the Hamptons. But Greensill was resolutely Lex’s business. The board mostly waved through whatever Lex wanted. Brierwood, who had helped Lex make his first steps into banking, often turned up to board meetings with a guitar, and would strum it as the meeting rolled by.
IN THE EARLY years, Greensill Capital struggled. But you wouldn’t necessarily know it. Greensill spent to impress. In London, Lex could often be found at the five-star Royal Horseguards Hotel, a plush site overlooking the Thames right around the corner from Parliament. (His family lived in northwest England.) The grand building, modelled on a French chateau, is a favourite spot for politicians to meet with businesspeople. Its construction in the late nineteenth century was also the focus of a famous fraudulent pyramid scheme perpetrated by a Liberal MP – a bad omen presumably missed by those who did business with Greensill back then.
Lex frequently held breakfast meetings at Horseguards. At this time, he often wore his Downing Street lanyard and almost always carried his two business cards: one with the UK government coat of arms on it, Lex’s name and the words ‘Senior Adviser Prime Minister’s Office’, and the other for Greensill Capital, which was about 50 per cent bigger than a normal business card. To those who asked why it was so big, Lex replied that the card had been made deliberately too large to slide down in a Rolodex, so it would stand out. Sometimes, when Lex was trying to hire someone, he’d even present them with a Greensill card made out in their name, as if to say: Look at what you could become.
Lex also became a trustee of the board of the Monteverdi Choir, a London-based choir and orchestra group. The Monteverdi promotes young musicians and classical music. It also serves as a networking platform for the establishment. Greensill board member David Brierwood was a trustee, as were various fund managers, private equity executives and senior bankers. Prince Charles is the group’s patron. Greensill sometimes sponsored Monteverdi events, spending as much as £80,000, including at Buckingham Palace. It was part of the price of entry to the British social and cultural elite.
GREENSILL CAPITAL NEEDED an office. Lex secured a spot on the Strand – a few doors down from Coutts, the royal family’s bank. The decor struck many visitors as odd. There were enormous paintings in baroque frames, lots of wood panelling, black wallpaper and black leather seats, and even a suit of armour and a long medieval pike. Lex wanted it to look like Rothschild, but many visitors thought it looked more like a theme park, or the distorted impression of a traditional City bank seen through the eyes of an unwitting outsider.
Greensill also opened an office in Gansevoort, in New York’s trendy Meatpacking District. The former industrial area had once been a den of iniquity before it was transformed, from the 1990s onwards, into a centre for cool Manhattan fashion and design, with trendy restaurants and glamorous bars. By the time Greensill arrived, the hipsters had moved on to other parts of the city, but it was still an expensive location to set up shop. Unlike other start-ups, where packing boxes serve as stools, the Greensill Gansevoort office underwent a major renovation, with Roland’s wife Jessica Nagle directing the work. Walls were taken down and the floorplan was redesigned. New artwork was acquired at a cost of tens of thousands of dollars. Visitors from the London office and elsewhere who flew into town and stayed at the nearby Gansevoort, then one of the coolest and most expensive hotels in the area.
New starters at Greensill were well looked after too. Even the most junior staffers would fly business class on long-haul flights. Lex himself travelled mostly on a private aircraft. Even though the Greensill business was not yet profitable, in 2015 he spent about $4 million on a Piaggio P-180 private turboprop plane. Greensill Capital didn’t have much business, but it looked the part.