Goldman Sachs Sells GreenSky: Q3 Earnings Take a Hit

Goldman Sachs sells GreenSky, impacting Q3 earnings. Find out more about the deal and its impact on the bank's financial performance.

Goldman Sachs has announced its decision to sell installment lending fintech GreenSky to a consortium of investors led by private-equity firm Sixth Street, marking another step in the bank's retreat from the mass market. The deal, expected to be finalized in the first quarter of 2024, will result in a decrease of 19 cents per share to Goldman's third-quarter earnings, which are due to be announced on Tuesday.

Goldman Sachs Sells GreenSky: Q3 Earnings Take a Hit | ogusyis

Although the financial terms of the transaction have not been disclosed, sources familiar with the deal have indicated that Goldman is selling GreenSky for approximately $500 million. This is significantly lower than the $1.73 billion that the bank paid for the fintech just last year.

The upcoming sale of GreenSky reflects Goldman's strategic shift away from the mass market, as it reevaluates its acquisition of the fintech. Initially, the investment firm had hoped that GreenSky would help it achieve ambitious targets for Marcus, the retail platform it launched in 2016. However, mounting losses and growing skepticism over the performance of Marcus have caused Goldman to revise its plans for expanding its consumer finance business.

During the bidding process, offers for GreenSky fell far below Goldman's expectations, leading to the anticipation of an imminent write-down. In July, the bank disclosed a $504 million write-down related to GreenSky. As part of the deal, Goldman will sell GreenSky's technology and associated loan assets, while continuing to operate the fintech until the sale is completed. The bank will also record ongoing business results until the deal closes, including the impact of an agreement for the consortium to purchase newly originated loans.

The consortium acquiring GreenSky includes funds and accounts managed by KKR, Bayview Asset Management, and CardWorks. The transaction also receives significant support from Pimco through an asset acquisition, as well as strategic financing from CPP Investments. This announcement confirms the rumors that have been circulating for almost a month, connecting Goldman with the Sixth Street-led group. The asking price for GreenSky has steadily declined since the initial deal with Goldman was announced in 2021, dropping from $2.24 billion to $1.73 billion by the time the acquisition was finalized in March 2022.

In conclusion, Goldman Sachs' decision to sell GreenSky reflects the bank's strategic retreat from the mass market and its revision of expansion plans for its consumer finance business. The sale to a consortium led by Sixth Street will result in a hit to Goldman's third-quarter earnings, highlighting the challenges and reevaluations faced by the firm. With this move, Goldman aims to streamline its operations and refocus its efforts on its core areas of expertise.