Financial firm Goldman planning to transfer ownership of GreenSky to a consortium led by Sixth Street.
In a significant move, Goldman Sachs has announced that it will sell GreenSky, its consumer finance business, to a consortium led by Sixth Street. The sale, expected to close in Q1 2024, comes after the bank's plans to grow its consumer finance business have been shelved.
The sale will result in a 19 cents per share hit to Goldman's third-quarter earnings, a reflection of the lower-than-expected offers during the bidding process. Rumours of the sale have been circulating for nearly a month, with the asking price for GreenSky falling consistently since the tie-up with Goldman was announced in 2021.
Goldman Sachs disclosed a $504 million write-down related to GreenSky in July, indicating the bank's decision to retreat from the mass market. The consortium acquiring GreenSky includes funds and accounts managed by KKR, Bayview Asset Management, CardWorks, and has significant support from Pimco and strategic financing from CPP Investments.
The bank will continue to operate GreenSky until the sale closes. Goldman is selling GreenSky's technology and associated loan assets, but no information about purchasing licensing rights was provided. The sale of GreenSky is a sign of the bank's continued progress in narrowing the focus of its retail business.
Goldman is focusing on advancing the strategy for its two core franchises: investment banking and trading unit, and asset and wealth management arm. This move marks a shift away from the consumer finance sector, a sector that has been less profitable for the bank in recent years.
The search results do not contain information about the company that will take over GreenSky from Goldman Sachs in the first quarter of 2024. The deal is expected to close in Q1 2024, but no new information about the expected closing date was provided.
This sale comes amidst Goldman's consideration of strategic alternatives for its consumer business. The bank has walked back plans to grow its consumer finance business, signalling a more focused approach to its core operations. The sale of GreenSky for approximately $500 million is a significant reduction from the $1.73 billion Goldman paid for the company last year.
In conclusion, Goldman Sachs' decision to sell GreenSky to a consortium led by Sixth Street is a strategic move aimed at refocusing the bank's operations on its core franchises. The sale, while resulting in a hit to third-quarter earnings, is expected to help the bank narrow its retail business and focus on more profitable areas. The deal is expected to close in Q1 2024, but no new information about the expected closing date was provided.
