Nov 8 (Reuters) - French prosecutors are investigating Sanjeev Gupta"s GFG Alliance, the Paris prosecutor"s office said on Monday, widening an ongoing investigation into an 18 million euro ($21 million) state-backed loan to one of its operations in France. The broader French investigation comes on top of a probe by Britain"s Serious Fraud Office into GFG Alliance as it attempts to refinance its steel and aluminium businesses following the collapse of supply chain finance firm Greensill Capital. Prosecutors in Paris said they opened an investigation in July into allegations of misuse of company assets and money laundering by GFG, following a decision by prosecutors in Poitiers to pass on their initial probe into the loan. The new investigation was first reported by the Financial Times on Sunday. GFG said in a statement that it was, "not aware of any such investigation and refutes any suggestion of wrongdoing in its French operations". The probe launched in the western city of Poitiers covered a state-backed loan from Greensill for a GFG-owned aluminium works that makes auto parts. It was prompted by employee claims that the funds disappeared after briefly being deposited at the unit. GFG bought Europe"s largest primary aluminium smelter in Dunkirk in 2018 but private equity firm American Industrial Partners (AIP) said it had assumed control of the smelter last month after a GFG default, in a takeover approved by France. Some of GFG"s smaller French sites have already been sold or closed, with two remaining factories under court administration. ($1 = 0.8655 euros) Reporting by Gus Trompiz in Paris, Eric Onstad in London and Aishwarya Nair and Rhea Binoy in Bengaluru; Editing by Daniel Wallis and David Clarke