Share price crashes: Grenke in free fall

Paryalyzed – that’s probably best. On Wednesday, too, investors and employees of the Baden-Baden company financier Grenke had to wait in vain for the announced “detailed reply”. The company’s brief angry reaction the previous day to the outrageous allegations made by British fund manager Fraser Perring is unsuccessful on the stock market.

Although Grenke has rejected his allegations “in the strongest possible way”, the share price fell by a further quarter. Since Perring made the allegations on Tuesday, the share price has fallen 44 percent.

The fact that the allegations are met with open ears also has to do with the sender. Perring and his analysis company “Viceroy Research” have made a name for themselves as “Wirecard hunters”. At the now insolvent Munich payment service provider, they had warned of fraud early on. Even the fact that Perring himself is openly betting on a decline in the share price and is now likely to have made a lot of money has not done anything to his credibility.

Bulky business model

On 64 closely printed pages, the investor lists a whole series of allegations. He accuses the company founder, Wolfgang Grenke, of later selling privately founded foreign companies to the company at excessive prices. This has inflated the balance sheet. In addition, cash in hand at the Bundesbank, among others, is set too high, and leasing business is not valuable. And in at least one case, the Grenke Bank made money laundering possible.

So far, Grenke has only specifically rejected the alleged lack of liquidity. This is demonstrably wrong, it says in the statement. 849 million euros, almost 80 percent of the liquid funds, would have been in the accounts of the Bundesbank at the half-year as published. The credit is currently 761 million euros.

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To the detailed view

Grenke reserve the right to take legal action against the allegations. A Grenke spokeswoman justified the slow reaction with the necessary thoroughness.

So far, Grenke has barely made headlines. Unlike the 69-year-old company founder Wolfgang Grenke himself, who travels a lot on public stages as a patron, financier of the Baden-Badener Festspielhau, chairman of the supervisory board of the Karlsruhe Sports Club and president of the Baden-Württemberg Chamber of Commerce and Industry, “his” company is Grenke is hardly known to the general public. This is probably also due to the bulky business model. Grenke – formerly known as Grenke Leasing – offers companies and the self-employed various financing models.

In addition to classic leasing, factoring is part of it – in this case Grenke buys all customer receivables at once, but at a discount. So customers get a little less money, but faster. The third pillar is traditional banking services such as loans and investments, bundled in the company’s own Grenke Bank. Wolfgang Grenke retired as Deputy Chairman of the Supervisory Board in 2018. Since then, Antje Leminsky, a graduate economist who previously worked for the auditing company PwC, has been on the board.

Wolfgang Grenke and his family still control around 40 percent of the shares. The former Dresdner Bank board member Ernst-Moritz Lipp has chaired the supervisory body for many years. As a professor of international finance at the Johannes-Goethe University in Frankfurt, he has the necessary specialist expertise for balance sheets. The figures are currently being checked by KPMG, before that EY was commissioned for a long time – the auditing company that has been heavily criticized since the Wirecard scandal.

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