Brookfield walks away from Sanjeev Gupta loan talks

Brookfield has ended talks with Sanjeev Gupta over a proposed loan worth hundreds of millions of dollars, dealing a blow to the British industrialist’s efforts to secure funding beyond his main lender Greensill Capital.

The Financial Times revealed last week that Gupta, dubbed the “saviour of steel” in the UK for his acquisitions of unloved metals plants, had been in talks with the Canadian asset manager about a loan secured on a stake in one of his most prized assets.

People familiar with the matter said these talks had now collapsed without a deal, however. The proposed loan would have sat at a holding company above Gupta’s InfraBuild, an Australian steel and recycling business that is considered one of the most stable assets within the industrialist’s GFG Alliance empire.

Brookfield, an investment powerhouse with more than $500bn in assets, was the only potential lender Gupta had been in discussions with, people close to the matter said last week when the discussions were first reported. 

The break-up of the talks comes as Credit Suisse on Monday froze withdrawals from $10bn of investment funds linked to Greensill, with executives at the Swiss bank particularly concerned about their exposure to Gupta’s businesses, according to people familiar with the matter.

Greensill, which is backed by SoftBank and advised by former UK prime minister David Cameron, has in recent years provided billions of pounds of financing to GFG Alliance — a loose collection of family-owned businesses that through an acquisition spree has turned into a sprawling empire, spanning metals to banking, with $20bn in revenues.

German financial regulator BaFin is also pushing a Greensill banking subsidiary to reduce its exposure to Gupta after probing the bank’s balance sheet and raising concerns around the level of risk connected to a single client.

While the talks with Brookfield had begun when Gupta was looking to buy Thyssenkrupp’s steel business, in what would have been one of his biggest deals yet, he was still looking to borrow the money after the German steelmaker broke off discussions last month, the people said. 

Brookfield and GFG Alliance declined to comment.

Gupta has a close relationship with Lex Greensill, the 44-year-old Australian banker who founded the finance company, and previously held a stake in Greensill Capital. In the past year, Greensill has also provided at least tens of millions of pounds of UK government-guaranteed loans to businesses associated with Gupta.

Greensill, whose slogan is “making finance fairer”, specialises in supply-chain finance, where businesses borrow money to pay their suppliers. It also provides receivables or factoring facilities, where companies are able to raise money from customer invoices.

Gupta’s businesses have drawn heavily on both techniques, which can be expensive and opaque.