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Artis Finance, a recently collapsed invoice-finance firm majority-owned by TDR Capital executives, has told its lenders that key documents it sent them “misrepresented” the health of its portfolio.
London-based Artis filed for administration last week, becoming the latest collapse of a firm that specialises in lending against outstanding bills between companies.
Artis sent a notice to its bondholders on Wednesday disclosing that during an investigation it discovered that “amendments were made” to documents that “misrepresented the true performance” of its portfolio.
The notice added that these amendments were made to so-called recent servicing reports, which investors in asset-backed securities rely on to track the financial health of the underlying loans backing their bonds.
Misrepresentations included that “certain financial covenants were reported as met when they were not in fact met”, according to the bondholder notice. Artis’s administrators at PwC have begun a “forensic investigation into these matters”, it added.
Artis funded its invoice-backed lending through a securitisation vehicle that is legally separate from the company that filed for administration. Artis disclosed to bondholders last month that over 24 per cent of the loans in the underlying portfolio were more than 60 days overdue, triggering a default on the bonds.
Caisse de dépôt et placement du Québec, one of Canada’s biggest pension funds, has the largest exposure to Artis’s bonds, according to people familiar with the matter. CDPQ owns $105mn of the $260mn outstanding bonds, according to one of those people.
“We are closely monitoring the situation and maintaining a dialogue with the administrator,” CDPQ said.
Artis’s collapse is a further blow to the trade finance market, in which money is lent against the invoices underpinning sales of goods.
The implosion of Greensill Capital amid fraud allegations in 2021 shone a spotlight on the pitfalls in the sector. More recently, UK fintech Stenn entered administration in December after its lender, HSBC, uncovered “extensive and systemic” issues with invoices it had financed.
The collapse of Artis is also a black eye for TDR, one of the UK’s most prominent private equity firms that co-owns supermarket group Asda. Former and current TDR partners Grégoire Paepegaey and Gary Lindsay stepped down as directors of Artis’s holding company earlier this month, two days before the company filed for administration.
The TDR fund that held a majority stake in Artis only contained the personal money of some of the firm’s executives, according to people familiar with the matter, rather than the third-party institutional investors that back its buyout funds.
Artis’s administrators and TDR declined to comment.
Artis primarily financed medium-sized commodities traders, many of which were based in the United Arab Emirates and Asia.
The firm previously drew scrutiny for lending to a company linked to Indian metals trader Prateek Gupta, who commodity trading giant Trafigura accused of masterminding a $577mn scam involving fake nickel in 2023.
Gupta has previously denied wrongdoing and litigation with Trafigura remains ongoing. Artis filed its own lawsuit against Gupta’s companies in London’s High Court at the end of 2023. Gupta did not immediately respond to a request seeking comment.
An August report from specialist credit rating agency KBRA noted that 80 per cent of the portfolio in Artis’s securitisation vehicle was backed by trade-credit insurance. Nearly a quarter of this insurance came from a Guernsey-based insurer owned by Artis’s holding company, however.
Investors have also faced difficulty claiming on this form of insurance in cases where fraud is suspected, with legal fights over Greensill’s insurance contracts still ongoing in courts in the UK and Australia four years after the firm collapsed.
