Goldman buys specialist lender GreenSky for $ 2.2 billion

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Updates from Goldman Sachs Group

Goldman Sachs has agreed to buy online loan provider GreenSky for $ 2.2 billion, as the Wall Street investment bank continues to strengthen its presence in consumer lending.

Goldman will pay GreenSky shareholders the equivalent of $ 12.11 per share, a premium of more than 50% over the company’s current share price. GreenSky shareholders will receive 0.03 Goldman Sachs common share per share.

Shares of GreenSky, a fintech platform that provides loans for one-time expenses such as construction work, jumped 52%.

This is Goldman’s second multi-billion dollar acquisition in less than a month, underscoring CEO David Solomon’s intention to transform Wall Street’s most revered investment bank into a more focused financial institution. on consumers.

Goldman’s asset management unit acquired NN Investment Partners, the asset management arm of Dutch insurer NN Group, for € 1.6 billion last month to expand the presence of the bank in Europe *. The acquisition of GreenSky is the largest made by Salomon since its takeover in 2018.

Goldman has adopted a two-pronged strategy for its entry into consumer banking.

Five years ago he started a digital bank, Marcus, which deals directly with customers. It has also partnered with other companies such as Apple to offer financial products, including credit cards.

Solomon has been a driving force behind this effort since taking the helm as he tried to reduce the bank’s reliance on volatile activities such as stocks and bonds.

“We have clearly expressed our aspiration for Marcus to become the consumer banking platform of the future, and the acquisition of GreenSky advances that goal,” he said.

“GreenSky… Will allow Marcus to reach a new and active set of merchants and customers and provide them with an expanding set of solutions.

GreenSky went public in 2018 at a valuation of $ 4 billion, but the company’s share price has consistently traded below its IPO price of $ 23. He was one of a number of online businesses that had promised to disrupt traditional banking, but struggled to do so, hampered by the increase in defaults. The company’s share price has fallen nearly 70% since its IPO.

The merger with Goldman will allow GreenSky to carry its loans on the bank’s balance sheet, potentially reducing its financing costs.

“GreenSky has continued to grow and has done a great job, but the reality is they need a balance sheet to achieve their next phase of growth,” said Stephanie Cohen, Global Co-Head of Consumer Management and heritage at Goldman.

GreenSky is one of the many lenders who work directly with merchants to provide financing for goods and services to help them increase sales, typically in the home improvement industry. This point-of-sale, or “buy now, pay later” financing has grown in popularity this year, but regulators have started cracking down on the company.

“GreenSky is a leader in the home improvement market and an incredibly attractive industry in point of sale,” said Cohen.

Atlanta-based GreenSky manages a $ 9 billion loan portfolio. Since its inception by David Zalik in 2006, approximately 4 million consumers have used its technology to fund $ 30 billion in commerce.

In July, the Consumer Financial Protection Bureau fined GreenSky $ 2.5 million for allowing merchants to take out loans on behalf of consumers without authorization.

*This story has been edited since the initial publication to clarify that the Goldman unit purchased the asset management arm of NN Group.

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