Goldman Sachs has signed an agreement to sell its speciality lending business GreenSky and associated loan assets to a consortium of institutional investors led by Sixth Street.
Last month, the Wall Street Journal reported that the US investment bank is in advanced talks with a group of investment companies to divest its GreenSky platform.
The consortium of institutional investors, led by Sixth Street, includes funds and accounts managed by KKR, Bayview Asset Management and CardWorks.
Also, the US-based investment management company PIMCO is significantly supporting the transaction, through an asset acquisition, along with strategic financing from CPP Investments.
The transaction is expected to be completed in the first quarter of 2024, subject to certain customary closing conditions.
Until closing, Goldman Sachs will continue to operate and record ongoing business results, including the effect of an agreement for the consortium to purchase newly originated loans.
Goldman Sachs chairman and CEO David Solomon said: “This transaction demonstrates our continued progress in narrowing the focus of our consumer business.
“While GreenSky is an attractive business, we are focused on advancing the strategy we laid out for our two core franchises.
“In Global Banking & Markets, we’ve improved our wallet share and are demonstrating strong growth in financing activities; and across our Asset & Wealth Management platform we are making very strong progress towards both our fundraising and management fee targets.”
Established in 2006, GreenSky is a financial technology company that provides technology to banks and merchants offering loans for home renovation, solar, healthcare, and other purposes.
Goldman acquired GreenSky during the peak of the Covid-19 pandemic when consumers stayed at home and spent on home renovations.
As the pandemic situation normalised, interest rates increased along with the cost of building materials, leading to a decline in GreenSky’s business.
Goldman Sachs & Company served as financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel to Goldman Sachs on the transaction.
Wells Fargo Securities served as the lead financial advisor, BofA Securities and Mizuho Americas as financial advisors and Simpson Thacher & Bartlett and Alston & Bird as legal counsel to the Consortium.
Sixth Street co-founder and CEO Alan Waxman said: “GreenSky accelerates business growth for its network of home improvement merchants by delivering innovative payment solutions at the point of sale, and we plan to continue the company’s legacy of driving growth through enhanced technology and great user experiences.
“Our team, led by Sixth Street Co-Founder Michael Muscolino and Head of Asset Based Finance Michael Dryden, has brought together an impressive group of strategic partners to put GreenSky and its experienced leadership team in the best position to succeed going forward.”
