HSBC raised fraud alarm that sparked collapse of fintech Stenn

A FINANCE firm backed by several influential Wall Street investors collapsed last week after HSBC Holdings discovered some of the company’s transactions may have been fraudulent.

The UK operating companies of Stenn Technologies, which said it was valued at US$900 million in 2022, were placed into administration on last Wednesday (Dec 4). The filing came after a unit of HSBC became concerned about potential irregularities it discovered in some of the firm’s transactions, according to people familiar with the matter, who asked not to be identified while discussing non-public issues.

Stenn’s founder and chief executive officer, Greg Karpovsky, left the country last week, according to some of the people familiar with the matter. He attended an all-company call on Dec 4 via video link but his location was unclear to employees, some of the people said.

A spokesperson for HSBC declined to comment, while Karpovsky did not respond to LinkedIn messages requesting comment. A spokesperson for Interpath, whose staff were appointed as Stenn’s administrators last week, declined to comment beyond an earlier statement on the appointment.

Launched in 2015, Stenn offered funding to small businesses by acquiring bills they were owed, known as invoice financing. The London-based firm attracted a number of well-heeled backers: Centerbridge Partners invested US$50 million into the company in a funding round in 2022, pushing the company’s valuation to near unicorn status, according to a press release at the time.

A spokesperson for Centerbridge, the US$38-billion investment giant led by co-founder Jeffrey Aronson, did not immediately comment.

Citigroup began working with Stenn in 2022 to finance businesses throughout supply chains, while senior lenders that have participated in securitisation programmes the firm used to fund its lending include Barclays, Natixis and Crayhill Capital Management, according to press releases issued by Stenn in recent years.

Spokespeople for Citigroup and Crayhill declined to comment, while spokespeople for Barclays and Natixis didn’t immediately respond to requests for comment.

HSBC Innovation Bank, formerly Silicon Valley Bank’s UK arm, provided Stenn with a revolving credit facility, according to documents filed at Companies House.

Stenn’s website said that it had financed more than 800 businesses with over US$20 billion. It was named as one of CNBC’s top 250 global fintech companies in July. BLOOMBERG