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Goldman Sachs has agreed to buy online loans provider GreenSky for $2.2bn, as the New York investment bank further deepens its shift towards becoming a more traditional lender with stable revenues.
The US investment bank will pay GreenSky shareholders the equivalent of $12.11 per share in stock, a more than 50 per cent premium to the company’s current share price. GreenSky shareholders will receive 0.03 of Goldman Sachs common stock per share.
GreenSky, a fintech platform which provides loans for one-time expenses such as building work, saw its share price increase by 52 per cent in pre-market trading.
It is the second multibillion-dollar acquisition by David Solomon, Goldman’s chair and chief executive, in less than a month, highlighting his intention to transform Wall Street’s most revered investment bank into a more consumer-focused financial institution.
Goldman’s asset management unit acquired Dutch insurer NN Group for €1.6bn last month to expand the bank’s presence in Europe. The acquisition of GreenSky is the largest carried out by Solomon since he took over in 2018.
Since launching its consumer bank Marcus five years ago, Goldman has been consistently diversifying its portfolio and investing in the business. Solomon has been a driver of this effort since taking the helm as he tried to reduce the bank’s reliance on volatile business such as equities and bonds.
“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,” Solomon 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 $4bn valuation, but the company’s share price has consistently traded below its $23 IPO price. It was among a number of online businesses that promised to disrupt traditional banking but have struggled to do so, hampered by rising loan defaults. The company’s stock price is down almost 70 per cent since its listing.
GreenSky is one of many lenders that work directly with merchants to offer financing for goods and services to help them boost sales. The so-called “buy now pay later” sector has been growing in popularity this year, but regulators have started to crack down on the business.
The Atlanta-based fintech company currently services a $9bn loan portfolio. Since it was founded by David Zalik in 2006, about 4m consumers have used its technology to finance $30bn worth of commerce.
In July, the Consumer Financial Protection Bureau fined GreenSky $2.5m for enabling merchants to take out loans on behalf of consumers without authorisation.