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.
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.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.