HSBC raised fraud alarm leading to collapse of fintech Stenn

London – 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 (S$1.2 billion) in 2022, were placed into administration on 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 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 Mr 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. 

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. 

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

Total liabilities at Stenn Assets UK, one of the companies in administration, were US$721 million at the end of December 2023, a filing shows.

That firm reported a pre-tax profit of US$64 million in 2023, according to the filing.

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. 

Mr Andrey Gurdzhibek, Stenn’s chief operations officer, said in a LinkedIn message that he is cooperating fully with the administrators and was not aware of or involved in any wrongdoing.

Chief financial officer Chris Rigby said he is “fully focused” on assisting the administration and declined to comment further.
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