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Goldman Sachs (GS) Invests 100 Million Pounds in Neyber

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Recently, Goldman Sachs Group, Inc. (GS - Free Report) marked its presence in the U.K. consumer lending market by making an investment of £100 million in Neyber, a start-up loan provider. The loans the company provides are repaid through the borrowers’ salaries. The news was reported by Financial Times.

Brief on Neyber

Founded in 2014, by two former employees of Goldman Sachs, Neyber collaborates with companies in order to offer loans at rates lower than other lenders. Per the article, Neyber is in business with companies such as City Airport, Anglian Water, Bupa, some National Health Service trusts and is also in talks with some of the retailers and professional services firms.

The company remains confident of its structure and expects low default rate, as the repayments are made directly out of salaries of the borrowers. Neyber is said to have provided about 7000 loans of up to £25,000 each, and has faced nearly 30 defaulters as of now. Further, it claims to have saved borrowers nearly £14 million in interest payments.

Goldman Sachs Investment in Neyber

Goldman Sachs provided £100 million of debt and equity financing to Neyber through its private capital unit, which seeks to finance medium-sized companies. This resulted in Goldman Sachs becoming a minority investor in Neyber.

Other Venture Plans in UK

Goldman Sachs is planning to expand throughout the U.K. by launching an online deposit business in mid-2018. The investment banker views this expansion as an opportunity to counter the current unstable economic environment and bolster revenue growth.

Shares of Goldman Sachs have gained 32.4% over the past 12 months, outperforming the 28.3% rally for the industry.

Currently, the stock carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are State Street Corporation (STT - Free Report) , Citizens Financial Group, Inc. (CFG - Free Report) and FB Financial Corporation (FBK - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

State Street’s Zacks Consensus Estimate for current-year earnings was revised 3.6% upward for 2017, in the past 60 days. Also, its share price has increased 36.5% in the past 12 months.

Citizens Financial’s current-year earnings estimates were revised 3.5% upward, over the past 60 days. Further, the company’s shares have jumped 35.9% in a year.

FB Financial’s Zacks Consensus Estimate for current-year earnings was revised 2.7% upward, over the last 60 days. Moreover, in the past year, its shares have gained 67.7%.

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