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Goldman Sachs Spends $2.2 Billion on BNPL Startup

GreenSky Goes for a Premium

Goldman Sachs (GS) is getting into the buy-now, pay-later market, spending $2.2 billion to purchase GreenSky (GSKY) in an all-stock deal. GreenSky provides loans for one-time large purchases such as cosmetic surgery or home improvements. The company has deals with thousands of merchants.

Goldman Sachs is paying a 55% premium for the company, despite GreenSky’s struggles since it went public in 2018. At that time it was valued at around $4 billion, but missed payments from customers and a lack of interest from banks to purchase the loans hurt its business. Since its peak, shares of GreenSky have fallen by about 70%.

BNPL Market Heats Up

GreenSky is among a crop of BNPL startups which are offering consumers interest-free installment payments at checkout. The market for these payment systems has taken off, ushering in a lot of dealmaking. PayPal (PYPL) recently paid $2.7 billion for Paidy, a Japanese BNPL startup. That deal comes on the heels of Square (SQ) acquiring Afterpay for over $29 billion and Amazon (AMZN) striking a deal with Affirm (AFRM) to let customers make installment payments on purchases of $50 or more. GreenSky is different from the other BNPL startups in that most of its loans are sold through physical retailers and home-renovation contractors.

This deal has been a long time in the making. Goldman Sachs had held talks about buying GreenSky two years ago but nothing came of them until the two sides resumed talks earlier this year.

Goldman’s Goals

By purchasing GreenSky, Goldman Sachs can beef up its consumer finance unit and expand beyond just serving wealthy investors. Goldman said the deal increases its customer base and gives it access to GreenSky’s network of over 10,000 merchants.

For decades, Goldman Sachs has been managing money for some of the world’s wealthiest individuals. Now it wants to help consumers renovate their homes via installment loans. It will be interesting to see if its initiative is successful and if other Wall Street firms will follow suit in the red-hot BNPL market.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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