Goldman Sachs has entered into exclusive talks with a consortium of investment firms to sell its GreenSky business for about $500mn, about a quarter of the price the Wall Street bank paid for the online lender in 2022.
The consortium comprises Sixth Street, Pacific Investment Management, KKR and two smaller investors, according to people familiar with the matter. Goldman is aiming to wrap up the sale by the time it reports third-quarter earnings, scheduled for October 17, the people said.
The people cautioned that talks could still falter and that the terms of the deal could change. Goldman, Sixth Street, Pimco and KKR declined to comment. The talks were reported earlier by the Wall Street Journal.
The sale of GreenSky, which lends to customers making home improvements, would mark a further step in chief executive David Solomon’s plans to pare back Goldman’s ambitions in consumer banking.
Goldman announced in April that it was initiating a sale process for the Atlanta-based lender. The bank agreed the GreenSky acquisition in 2021 for $2.2bn but closed the deal at a price of $1.7bn in March 2022.
When Goldman agreed the deal two years ago, it underscored the company’s ambitions to become a leading player in consumer banking.
However, following investor unease with the strategy and years of heavy losses, Goldman last October announced it was scaling back its retail banking plans. In another deal reversal, Goldman last month agreed to sell the United Capital investment advisory business it acquired four years ago.
Alternative asset managers such as Apollo Global Management, Sixth Street and KKR have been aggressively expanding their credit and insurance-related investment operations and have begun acquiring debt origination businesses to fuel their asset growth. Apollo has built or acquired more than a dozen lending businesses that originate loans for an array of products and services, including rental equipment and aircraft leases.
For Sixth Street, a potential GreenSky deal would give it the ability to directly originate a range of home improvement loans, which some credit investors have favoured because homeowners traditionally carry high credit scores.
Sixth Street carries close ties to Goldman. It was co-founded by several former Goldman executives including Alan Waxman, David Stiepleman and Joshua Easterly. In recent years, it has hired top executives leaving the Wall Street bank, including former chief financial officer Marty Chavez and Julian Salisbury, its former head of asset management.
Additional reporting by Brooke Masters