Dive summary:
- Goldman Sachs will sell the installment loan financial technology Green Sky to a consortium of investors led by private equity firm Sixth Street, the bank announced Wednesday.
- The deal, which is expected to close in the first quarter of 2024, will result in a 19 cent per share hit to Goldman’s third-quarter earnings, which will be reported Tuesday.
- Goldman did not disclose financial terms of the transaction. Goldman is selling GreenSky for about $500 million, people familiar with the matter said. The Wall Street Journal. It is a fraction of the $1.73 billion The bank paid for fintech last year.
Dive Overview:
The upcoming sale of GreenSky marks the latest step in Goldman’s retreat from the mass market and caps an acquisition the investment firm once hoped would help it achieve ambitious goals for Marcus, the retail platform it launched in 2016.
“We have been clear about our vision for Marcus to become the consumer banking platform of the future, and the acquisition of GreenSky advances that goal,” said David Solomon, Goldman’s CEO. said when announcing the acquisition in September 2021.
However, amid mounting losses and growing skepticism about Marcus’ performance, Goldman has went back on his plans to develop its consumer credit business.
Salomon said in February that the bank was “consider strategic alternatives” to its general public activity but has not confirm she was considering selling GreenSky until two months later.
Solomon told analysts At the time, Goldman determined that it “may not be the best long-term holder” of the fintech.
During the bidding process, GreenSky’s purchase offers had fallen far short lower than Goldman had hopedaccording to reports, suggesting that a depreciation is imminent.
“Everybody has made low bids, and the Goldman team continues to push, pounding the table about the value of the stock,” one bidder said. told CNBC in June.
Indeed, Goldman revealed a $504 million writedown related to GreenSky in July.
Focus on core franchises
The sale of GreenSky is a sign of the bank’s continued progress in shrinking its retail business, Solomon said Wednesday.
“While GreenSky is an attractive business, we are focused on advancing the strategy we have defined for our two core franchises,” he said in a statement, referring to the company’s investment banking and trading unit and its asset and wealth management arm.
As part of the deal, Goldman is selling technology and associated lending assets owned by GreenSky, the bank said.
Goldman Sachs will continue to operate GreenSky until the sale closes, the bank said. Until the transaction closes, Goldman Sachs will record the results of the ongoing business, including the impact of an agreement for the consortium to purchase new loans, the bank said.
The consortium acquiring the fintech is comprised of funds and accounts managed by KKR, Bayview Asset Management and CardWorks. The transaction includes significant support from Pimco through an asset acquisition, as well as strategic financing from CPP Investments, Goldman said.
Wednesday’s announcement confirms rumors that have been circulating for almost last monthconnecting Goldman and the group led by Sixth Street.
The asking price for GreenSky has been steadily falling since the merger with Goldman was announced in 2021. Goldman had initially agreed to pay $2.24 billion for the fintech, but the deal value fell to $1.73 billion by its finalization in March 2022.