General Atlantic’s investment in Greensill had put Lex on the radar of SoftBank Group Corp’s Vision Fund, one of the biggest guns of global investing. It’s a rule of high finance that if one big financial firm does a deal, others will probably assume that their rivals did their work properly and follow suit.
Masayoshi Son, the CEO of giant Japanese conglomerate SoftBank, had launched the $100 billion Vision Fund in 2017. He staked about $28 billion of SoftBank’s own money; Saudi Arabia’s sovereign wealth fund put up another $35 billion and about $15 billion came from Mubadala Investment Company, Abu Dhabi’s wealth fund. The rest came from a collection of businesses and major global investors. Within a few months, the Vision Fund became the most powerful technology investor in the world.
At its head was a former Deutsche Bank executive named Rajeev Misra. Raised in Delhi, Misra studied at the Massachusetts Institute of Technology before embarking on a career on Wall Street. At Deutsche Bank, he had run a team of credit traders who profited from the crash in the US sub-prime mortgage market. He had developed a strong personal bond with Masayoshi Son since 2006, when he raised $16 billion in debt SoftBank needed for a large acquisition – the deal had helped make the SoftBank CEO a multibillionaire.
Misra joined SoftBank in 2014. His rise to the top of the Vision Fund was described in scintillating detail by my former colleagues at The Wall Street Journal in an article that alleged Misra employed a series of dirty tricks to undermine his rivals for the role. Misra and SoftBank denied the allegations.
The Vision Fund chief certainly has an unusual style. It is well known that he shuffles around his office in London’s glamorous Mayfair district in bare feet, playing with strings of beads while encouraging his team to make hundreds of investments, often betting enormous sums on a chosen start-up at lightning pace. Sometimes the approach pays off. Sometimes it doesn’t.
A report by an external consultant in 2018 found that there were few controls at the Vision Fund and staff were encouraged to gamble with the fund’s money to enhance their own personal reputations. That culture has delivered a patchy track record. The fund has made billions from investments in cab service Uber and food delivery company Doordash. Its investment in WeWork, however, was a spectacular dud. SoftBank invested about $18.5 billion in WeWork. Then in 2019 the shared office business imploded when it was forced to drop a planned public offering of its shares after investors balked at its valuation and the antics of its flamboyant CEO Adam Neumann.
Meanwhile, Greensill’s profile was rising after the General Atlantic investment.
In mid-March 2019, some junior Vision Fund executives working for Misra had their first brief meetings with Lex in New York and then with David Solo in San Francisco. On 26 March, the SoftBank team met with Greensill again. This time, it was a full day of talks with Lex, David Cameron and other members of the Greensill management team in London. The team liked what they found. They reported to Misra that Lex Greensill was worth his attention.
At first Misra was sceptical. He had seen Greensill’s name mentioned in stories about what was happening at GAM, whose headquarters were just around the corner from the Vision Fund office. He was wary of investing in a company that was entangled in an ongoing financial affair. There were plenty of other businesses to go after. Why invest money, or time, in one that was already caught up in scandal? He didn’t need the hassle. His team argued the GAM affair would pass and leave no lasting impact on Greensill. Greensill would survive and move on, a better company. They could also take some comfort that General Atlantic was already on board. Surely GA wouldn’t have backed Greensill if there was any deeper impropriety?
Misra agreed to meet Lex in person.
A few days later, on Thursday 28 March, Lex came to the Vision Fund office. For Lex, this was a huge opportunity. Given the Vision Fund’s reputation for largesse, this was a chance to seal an enormous funding round. Having GA on board brought credibility and helped clear some of the problem loans. Having the Vision Fund invest would make Lex and his brother Peter and some of the others extraordinarily rich.
He came to the meeting flanked by his chief of staff, Daniel Shuttleworth, and Bart Ras, a Dutch trade finance specialist who’d joined the firm in 2016 and was evangelical about supply chain finance. Neither was a heavy hitter. Ras and Shuttleworth were the chorus line. This was Lex’s show.
The pitch was well honed. Lex retold his engaging personal tale, about his childhood on the farm near Bundaberg and his parents’ problems with late payments. He preached the magic of supply chain financing. He talked about an NHS payments scheme that helped pharmaceutical supplies run more efficiently through the system. He outlined his plans to fund workers getting their salaries paid early too.
Misra was impressed. Like GA, the Vision Fund had looked at other supply chain finance firms. There was a compelling case for the entire sector. Greensill was the market leader. But the GAM issue still nagged. Misra bluntly quizzed Lex. Is this GAM problem going to come back to Greensill? No, said Lex. It’s an internal GAM matter. Do I have your word that there is no way this comes back to Greensill, asked Misra. Yes, said Lex, you have my word. Misra was on board.
Lex’s response to the direct questioning on GAM was beyond optimistic. Despite what he told the Vision Fund chief, Greensill lay at the heart of the scandal at GAM. Lex’s firm wasn’t some innocent bystander caught up in another company’s affair. Greensill was the crux of the affair. But his responses to Misra, who held the key to vast riches, worked.
The following Thursday, Lex Greensill and David Cameron flew halfway round the planet to Tokyo. They bundled themselves into waiting cars and zipped across the city to SoftBank’s imposing headquarters. If the first meeting with Misra had got Lex officially in the door, then this meeting, in Japan, was critical. There were some of the same Vision Fund staff they’d met with before. But critically, Lex and Cameron also met with SoftBank CEO Masayoshi Son himself.
Son is one of the most powerful, and unconventional, investors in the world. He encourages the Vision Fund to invest huge sums of money on companies, so long as they can promise to shoot for the moon. He also compensates his top executives handsomely. Many of the senior lieutenants in SoftBank earn tens of millions of dollars a year. He wants them to identify fast-growing markets or industries, and then invest in the biggest, best or most aggressive businesses in that market. Often, Son invests more money than the start-up companies said they needed.
Cameron’s role at the Tokyo meeting was mainly ornamental. He didn’t contribute much detail about supply chain finance or deal terms. But he spoke passionately about the vision for Greensill. The company’s future was exciting. It planned to change the way finance happened around the world.
Lex delivered his finely tuned pitch once more. He came across as ambitious, determined, a disruptor who would change banking for ever. He wasn’t content with running a few billion dollars of supply chain finance programmes. Lex wanted to finance every single receivable in the world.
This was exactly what Masayoshi Son wanted to hear. Greensill was dealing with $31 billion worth of transactions already, but it could be handling $385 billion in just a few years. Revenue was $204 million today. It could be $2 billion by 2025. This was exponential growth.
The Japanese billionaire was impressed. This kind of business, this kind of growth, was exactly why the Vision Fund had been created.
Over the next few weeks, Vision Fund executives met with Greensill four more times. They had dinner with Lex and Gabe Caillaux from General Atlantic. Vision Fund people called several of Greensill’s clients and major partners.
A SoftBank lawyer talked to GAM’s new management regime, including the interim CEO David Jacob. The SoftBank lawyer reported back that – as far as they could tell – there was no risk of any blowback to Greensill. Greensill executives were not accused of wrongdoing and appeared to have no knowledge of ex-GAM portfolio manager Tim Haywood’s activities. The lawyer also echoed a line that Lex frequently offered up – that none of GAM’s investors lost money on the Greensill assets. This was an incredibly narrow assessment.
The Vision Fund spoke to Credit Suisse. The Japanese conglomerate was a lucrative client of the Swiss bank. Credit Suisse had worked as a financial adviser to the Vision Fund, helping to raise funds for some of its portfolio companies, including through an initial public offering (IPO). Masayoshi Son had also borrowed from Credit Suisse for decades, pledging his shares in SoftBank as collateral for billions of dollars of loans. Credit Suisse’s Michel Degen endorsed Greensill wholeheartedly. The bank had about $4 billion of client money invested in Greensill’s loans. They were planning on pitching to more clients in Asia and across Europe soon. They expected the funds to grow to $10 billion in a few years, maybe $15 billion.
SoftBank also spoke with Sanjeev Gupta. Greensill is exceptional, he told the SoftBank team. They’re faster and more innovative than the banks. They’re more expensive, but they are far more efficient and responsive to the needs of GFG. Gupta’s response was hugely supportive of Greensill. Of course it was.
SoftBank spoke with a couple of dozen partners, clients, investors and others who worked with Greensill. But what struck me later was that nobody from the Vision Fund talked to Sheard, the whistle-blower, or to Friedman, the ousted GAM CEO. They had not looked at the underlying assets that were at the heart of GAM’s demise. They did not talk to the company that was by far Greensill’s biggest insurance provider. They did not speak with some of Greensill’s biggest customers, who were the company’s main sources of revenue. These omissions are striking. SoftBank’s research missed several key Greensill relationships that turned out to be major problems.
Whereas GA had courted Lex for years, the Vision Fund team made their decision at typically lightning speed. The outcome was the same. From start to finish, it had taken about eight weeks for the Vision Fund to decide to invest $800 million into Lex’s business. A press release said the money was going to be invested in new technologies and to expand in emerging markets. But that wasn’t really true. Lex immediately sent about $400 million to build up Greensill Bank’s balance sheet. About $135 million would support initiatives in new geographical markets, or to acquire new businesses or develop technology. The rest would be used to buy shares from existing investors. For that, the Vision Fund got about 22 per cent of the company – Greensill was now valued at about $3.5 billion. Lex and his brother Peter owned more than a third of the shares, and they’d just become billionaires, at least on paper.
FOR THE NEXT few months, Lex’s star shone brightly. He became a kind of finance start-up celebrity, a regular guest on business news television shows. He cultivated a relationship with Sky television’s Ian King and with Sky News business reporter Mark Kleinman.
More importantly, he cultivated a personal connection to Masayoshi Son. SoftBank insiders felt Lex was spending more time with Masa than just about anyone else. The Australian followed his new mentor to Washington DC, Jakarta, Tokyo . . . just about wherever he went. He was like Son’s shadow. The two talked most days by phone. And while everyone else referred to him as Masa, Lex insisted on the more formal ‘Son-san’ because, he said, it was disrespectful to call him Masa.
On a Vision Fund web page, Greensill said Masa was a ‘partner and a mentor’: ‘He has worked with us, and particularly with me, to think about our core business and how we can actually take that core business and tackle other inequalities and other challenges that exist in the global market.’
The appreciation went in both directions. At internal SoftBank events, Son put Lex on a pedestal alongside other stars of the Vision Fund, especially WeWork founder Adam Neumann, who was still then in favour, and Ritesh Agarwal, the head of India’s OYO Hotels. The three were featured in a presentation to SoftBank shareholders that referred to them as pioneers of artificial intelligence leading ‘the biggest revolution in human history’.
Son also pointed to Greensill as an example of how portfolio companies could benefit from the network effect they could achieve by working together – the so-called ‘Cluster of No. 1’ strategy. Vision Fund insiders found that Greensill’s name was frequently invoked by Son in meetings, often as a solution to financing problems at other portfolio companies. A Vision Fund company needed more cash? Greensill can get it. A portfolio company has trouble in its supply chain? Greensill will make it more efficient.
Lex’s unrestrained ambition also played to Masa’s most fanciful projects. One plan, nicknamed Project Olympus, involved lending billions of dollars to WeWork. Wall Street Journal reporters Eliot Brown and Maureen Farrell described what happened next in their book on WeWork, The Cult of We. According to their version of events, Son had asked WeWork CEO Neumann to fly to Tokyo for a meeting in August 2019. Neumann thought Son might ask him to call off the planned WeWork IPO – which was looking tougher every day – or offer to make a large investment. But he was taken by surprise when Son instead introduced Lex Greensill, touting him as the solution to WeWork’s pending cash crunch. The WeWork CEO and his team were immediately sceptical that Greensill could really provide the funds, and they were concerned about potential conflicts of interest, given SoftBank’s recent investment in Greensill. Neumann and his staff mockingly referred to Lex as ‘Lex Luthor’; he refused the offer of Greensill’s help.
By then, Greensill had quite clearly become the most favoured of Masa’s flock of tech founders. In October 2019, just a few months after its first investment in Greensill, the Vision Fund poured another $655 million into the firm. Colin Fan, a former Deutsche Bank executive who was the SoftBank lead on the Greensill investment, said in a press release that Greensill was ‘transforming global business access to working capital through its innovative business model.’
This time around, almost all the Vision Fund financing went to pay out existing shareholders. Lex and his brother Peter were the biggest beneficiaries. But others had hit the jackpot too. Lex told some of his staff that one early employee who had since left the firm was demanding Greensill pay out on about $100 million worth of shares. Lex said he paid the money, but only after extracting a fee of about 13 per cent, or $13 million.
Lex boasted frequently of his closeness to Masa. In November 2019, SoftBank held a conference for CFOs and CEOs of Vision Fund portfolio companies at The Ritz-Carlton hotel in Half Moon Bay, California. Greensill was treated like a guest of honour, and at one point he was invited on stage to provide lessons about finance to the other attendees. He also told associates there that Masa was personally mentoring him.
Not everyone at the Vision Fund was impressed. Some considered him arrogant. He was also racking up huge costs. Greensill was hiring rapidly, and it wasn’t always clear why. Over the next twelve months or so, staff levels doubled to about 1,000. He was also one of only two portfolio company founders who were thought to have their own private jets. The other was Adam Neumann. But whereas Neumann was renowned for smoking marijuana and partying on board his jet, as The Wall Street Journal had reported in September 2019, you were more likely to get English tea and dry business talk on Greensill’s planes. He was all flash without the fun.
In early 2020, though, Lex’s reputation was still soaring. At the World Economic Forum in Davos that January, he was frequently by Masa’s side, as the Japanese tech titan met with world leaders. Lex had arrived at Davos without proper winter footwear – a no-no on the slippery streets, where the footsteps of the global elite turn the snow and ice into a skating rink. Lex got his personal assistant to buy dozens of pairs of snow-worthy shoes and bring them to David Solo’s Davos apartment, where Lex was staying for the duration of the conference. Too busy to visit a shoe shop, Lex effectively had his assistant bring the shop to him. He spent the rest of the week riding on Masa’s coat-tails and following David Cameron around.
The next month, he followed Son to Jakarta. Masa was working on one of his grandest plans yet, to finance the construction of an entirely new capital for Indonesia. He had announced the project the previous summer. It would involve building a new city on a site in a sparsely populated region of Borneo. The city would boast futuristic educational establishments, medical facilities and transport systems. It would be four times the size of the current capital, Jakarta, which is polluted, congested with traffic, and sinking because of the over-extraction of groundwater.
The new capital would be super-wired for new tech, and citizens would pay a subscription to live there. And the whole thing would be financed by Lex Greensill.
Lex was the ‘money guy’, Son told Indonesia’s president Joko Widodo, according to local TV footage. In front of other SoftBank executives, Masa asked Lex directly about his capacity to pay for the plans. Are you good for $100 billion on the new Indonesia capital? Yes, I’m good for $100 billion, Lex replied. Then he turned to Eric Varvel, the head of wealth management at Credit Suisse, who was also in attendance. Are we good for the money? Yes, said, Varvel, if Greensill can arrange the deal, Credit Suisse would place $100 billion with its clients. For Masa, the new capital fantasy would be a reality built with Lex’s money.
Masa Son was Lex’s latest and most effective mentor. He followed in the footsteps of the likes of Robert Cleland at OzEcom, David Brierwood at Morgan Stanley, Jeremy Heywood in the UK government. Yet, within just a few months, the relationship would almost completely collapse.