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Goldman (GS) Closes GreenSky Buyout to Augment Retail Lending

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The Goldman Sachs Group, Inc. (GS - Free Report) has closed the previously announced acquisition of GreenSky, Inc. in an all-stock transaction.In an effort to augment its retail lending footprint, Goldman entered a definitive agreement last September to acquire GreenSky, a pre-eminent fintech platform that offers home-improvement consumer loan originations.

As part of the agreement, Goldman acquired GreenSky in an all-stock deal. GreenSky stockholders received 0.03 shares of Goldman’s common stock for each share held.

GS management noted, “This transaction furthers our aspirations to meet customers where they transact, providing them with simple and transparent home improvement financing solutions. As we build the consumer banking platform of the future, GreenSky will be a key component of our offering and we look forward to the contributions of our new colleagues”.

GreenSky’s unique lending capabilities, and leading merchant and consumer ecosystem will aid Goldman in strengthening its consumer banking unit. Moreover, it provides Goldman an opportunity to leverage the lender’s growing user base, tap the $430-billion home improvement market and position it for significant growth.

When the deal was announced, it was expected to generate robust returns on invested capital, with mid-teens IRR accretion for GS. Also, by strengthening its consumer banking business, the transaction will diversify revenues and propel higher and more durable returns, thereby aiding the company to meet its targets.

Encouragingly, revenues in the Consumer segment are projected to reach $4 billion by 2024. This will likely be supported by more than $150 billion in deposits, and loans/cards balance exceeding $30 billion by the same year.

The GreenSky buyout aside, in August 2021, GS entered an agreement to acquire Dutch asset manager NN Investment Partners from NN Group N.V. in a €1.6-billion (or $1.9 billion) all-cash transaction. This will improve Goldman’s international presence, and European retail distribution and insurance asset management capabilities. Such inorganic growth efforts will diversify the fee-revenue base and offer top-line stability.

Such moves are supported by the company’s solid liquidity position. Goldman had cash and equivalents of $261 billion, while unsecured long-term borrowings stood at $254 billion as of fourth-quarter 2021 end. Goldman also maintains investment-grade long-term debt ratings.

Over the past year, shares of this Zacks Rank #4 (Sell) company have gained 2.3% compared with the industry’s rise of 7.2%.


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Other Companies Making Inorganic Moves

JPMorgan (JPM - Free Report) inked a deal to acquire Ireland-based fintech firm Global Shares. The deal value hasn’t been disclosed yet. The transaction, still subject to regulatory approvals, is expected to be wrapped up in the second half of 2022.

Following the closure of the deal, Global Shares will be integrated into JPMorgan’s Asset & Wealth Management segment. The firm will continue to be based out of its current location.

To further boost its fixed-income trading operations, Raymond James (RJF - Free Report) inked a deal to acquire SumRidge Partners, LLC. The financial details of the transaction, which are subject to certain regulatory and other closing conditions, were not disclosed.

SumRidge is a technology-based “fixed income market maker” specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional-preferred securities. Its integration with Raymond James’ Fixed Income Capital Markets will complement the “core client-facing business” and add sophisticated trading technologies and risk management tools.

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