Financial institution Goldman Sachs is set to transfer ownership of GreenSky to a consortium led by Sixth Street.

Goldman Sachs Sells Fintech Company GreenSky to Consortium for $500 Million

After acquiring GreenSky for $1.73 billion last year, Goldman Sachs has announced its decision to sell the installment lending fintech company to a consortium of investors led by private-equity firm Sixth Street. The deal, expected to close in the first quarter of 2024, marks a significant shift in Goldman's consumer business strategy.

According to Goldman Sachs CEO David Solomon, the retail business of the financial giant is narrowing its focus. The sale of GreenSky is a reflection of this strategy, as Goldman continues to focus on its core franchises: its investment banking and trading unit, and its asset and wealth management arm.

Initially, offers to buy GreenSky during the bidding process were lower than what Goldman was hoping. However, the consortium acquiring GreenSky consists of funds and accounts managed by KKR, Bayview Asset Management, CardWorks, with significant support from Pimco and strategic financing from CPP Investments.

The finalized deal value for GreenSky is $500 million, a decrease from the initial agreed-upon price of $2.24 billion. This decrease in value has been a gradual trend since the tie-up with Goldman was announced in 2021, with the asking price for GreenSky consistently falling.

Rumors of a potential sale of GreenSky to a Sixth Street-led group have been circulating for nearly a month. Solomon, in announcing the acquisition, stated that Goldman may not be the best long-term holder of GreenSky.

Under the terms of the agreement, there is an ongoing arrangement for the consortium to purchase newly originated loans from GreenSky until the deal closes. Goldman will continue to operate GreenSky until the sale closes.

The sale of GreenSky is expected to result in a hit of 19 cents per share to Goldman's third-quarter earnings. This decision comes amid mounting losses and growing skepticism over the performance of Marcus, Goldman's digital consumer bank.

The technology and associated loan assets of GreenSky are being sold as part of the deal. The exact identities of the buyers of the fintech company from Goldman Sachs have not been publicly disclosed.

Despite this sale, Goldman Sachs remains committed to its consumer business, albeit with a more focused approach. The acquisition of GreenSky in September 2021 was a bold move aimed at expanding its consumer offerings. However, the decision to sell GreenSky indicates a strategic shift towards its core businesses.