Dive Brief:
- Goldman Sachs will sell the installment lending fintech GreenSky to a consortium of investors led by private-equity firm Sixth Street, the bank said Wednesday.
- The deal, which is expected to close in the first quarter of 2024, will result in a hit of 19 cents per share to Goldman’s third-quarter earnings, to be announced Tuesday.
- Goldman did not disclose the financial terms of the transaction. Goldman is selling GreenSky for around $500 million, sources familiar with the deal told The Wall Street Journal. That’s a fraction of the $1.73 billion the bank paid for the fintech last year.
Dive Insight:
GreenSky’s upcoming sale marks the latest step in Goldman’s retreat from the mass market, and closes the book on an acquisition the investment firm had once hoped would help it hit ambitious targets for Marcus, the retail platform it launched in 2016.
“We have been clear in our aspiration for Marcus to become the consumer banking platform of the future, and the acquisition of GreenSky advances this goal,” Goldman CEO David Solomon said in announcing the acquisition in September 2021.
However, amid mounting losses and growing skepticism over the performance of Marcus, Goldman has walked back plans to grow its consumer finance business.
Solomon said in February that the bank was “considering strategic alternatives” to its consumer business but didn’t confirm it was exploring selling GreenSky until two months later.
Solomon told analysts at that time that Goldman had determined it “may not be the best long-term holder” of the fintech.
During the bidding process, offers to buy GreenSky had been far lower than what Goldman was hoping, according to reports, spurring the prospect that a write-down was imminent.
“Everybody’s been coming in low, and the Goldman team keeps pushing back, pounding the table about the value of it,” one of the bidders told CNBC in June.
Indeed, Goldman disclosed a $504 million write-down related to GreenSky in July.
Focusing on core franchises
Offloading GreenSky is a sign of the bank’s continued progress in narrowing the focus of its retail business, Solomon said Wednesday.
“While GreenSky is an attractive business, we are focused on advancing the strategy we laid out for our two core franchises,” he said in a statement, referring to the firm’s investment banking and trading unit and its asset and wealth management arm.
As part of the deal, Goldman is selling the technology and associated loan assets belonging to GreenSky, the bank said.
Goldman will continue to operate GreenSky until the sale closes, the bank said. Until the close of the deal, Goldman will record ongoing business results, including the impact of an agreement for the consortium to purchase newly originated loans, the bank said.
The consortium acquiring the fintech consists 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 swirled for nearly the past month, connecting Goldman and the Sixth Street-led group.
The asking price for GreenSky has fallen consistently since the tie-up with Goldman was announced in 2021. Goldman initially agreed to pay $2.24 billion for the fintech, but the value of the deal dropped to $1.73 billion by the time it finalized in March 2022.
