Pagaya Technologies LTD. (NASDAQ: PGY) (“Pagaya” or “the Company”), a global technology company delivering AI-driven product solutions for the financial ecosystem, and Castlelake, L.P. (“Castlelake”), a global alternative investment manager specializing in asset-based private credit and an experienced investor in consumer credit opportunities, announced an agreement for Castlelake to purchase, subject to certain terms and conditions, an aggregate amount of up to $1 billion in consumer loans through the Pagaya network. Following satisfaction of the closing conditions, Castlelake will acquire loans on a monthly basis for an initial 12-month term, with the potential for the agreement to be extended for additional loan purchases over time.
This transaction expands and diversifies Pagaya’s funding capacity, and adds a new, highly strategic funding partner to Pagaya’s network of over 120 institutional investors. Funding mechanisms like forward flow represent a step-change in driving capital efficiency, by enabling Pagaya to fund loan originations with minimal use of its own capital. The Company expects to scale this initiative and others as it continues to diversify its funding by channels beyond its flagship pre-funded ABS program.
“We are incredibly excited to have Castlelake as a dedicated funding partner on our network,” said Pagaya’s CFO Evangelos Perros. “A core element of our financial strategy is to expand our funding capacity in a capital-efficient way with some of the world’s leading asset managers. Our forward flow agreement with Castlelake goes a long way in accomplishing that goal.”
“Castlelake is pleased to partner with the Pagaya team on this important funding initiative,” said John Lundquist, Partner, North American Specialty Finance at Castlelake. “We believe the partnership can provide access to attractive risk-adjusted exposure to consumer loans, at a time when the utility of credit is of significant importance to consumers. We look forward to building a fruitful relationship with the Pagaya team over time.”
