The Goldman Sachs Group, Inc. ( GS Quick Quote 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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