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Payday loans could soon be a thing of the past after Softbank indicated that it will invest £510 million Greensill. Lex Grensill a founded Morgan Stanley banker created the online finance platform.
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New payday service to see an end to payday loans
Greensill announced the new acquisition is part of its plan to introduce a new service to that will see an end payday loans. The online finance firm is in advanced talks to acquire London startup Freeup. Freeup is a tech company that will enable Greensill to offer ordinary employees with an early payment of their salaries.
The firm is receiving additional funds from the Japanese conglomerate to support the project of paying employees earlier. Equally the funds will help in furthering its acquisitions as well as expanding globally. This is not the first time the Vision Fund is investing in the firm. In May this year, the company received an initial investment of $800 million from Vision Fund.
Also Read: How Much Will A Payday Loan Cost Me?
Currently, Greensill focuses mainly on supply chain financing which allows suppliers of a company to secure early payments covering their invoices. The company is now focusing on expanding the service to extend it to employees of a company. The Freeup tech will enable employees to get payment earned but yet to be paid salary at no cost. Companies might opt to use the platform by paying so that it can be a perk to their employees.
According to Lex Greensill, employees are suppliers offering their skills and time to employees. Therefore there is no difference between paying for an invoice earlier and payment of early wages. In the last 14 months, Greensill has sourced over $1.7 billion from different investors.
Softbank takes over WeWork
Masayoshi Son the leader of Vision Fund is pumping cash into the project to help in the expansion strategy. According to people privy with the matter, a deal could be ready as earlier as this week.
The Softbank investment is an indication of Son’s huge appetite to secure deals. This latest investment is a sign of renewed confidence for the troubled investment section of Softbank. This is despite receiving significant criticism following the botched investment in office space renting company WeWork.
Currently, Softbank has taken over the troubled WeWork following reports that the company was dry of cash. However, the valuation of the deal was much lower at around $8 billion down from the initial valuation of $47 billion. Softbank agreed to pay the founder of WeWork Adam Neuman $1.7 billion for him to cut ties with the company.
The deal could spell the end for payday loans lenders
Son has also backed Slack and Uber and this investment confirms his massive appetite for huge deals. The deal could also spell the end of payday loans that have received criticism for their high-interest rates.
Last week UK’s largest payday loans lender Quickquid went into administration following growing pressure from regulators. The collapse of Quickquid comes hardly a year after another payday loan firm Wonga collapsed due to growing customer compensation claims.
Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.