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Goldman's (GS) GreenSky Gets Buyout Offers From Investment Firms
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The Goldman Sachs Group, Inc.’s (GS - Free Report) consumer lending platform GreenSky has received buyout offers from investment firms Apollo Global Management, Sixth Street and Warburg Pincus. The news was reported by Semafor that cited people familiar with the matter.
Some bids are for GreenSky’s loan-writing operations, while others are for legacy loans on Goldman’s books. The bids value GreenSky at “mid-nine figures”, per the report. Notably, in March 2022, Goldman completed its purchase of GreenSky in an all-stock transaction valued at around $2.24 billion.
GS had acquired GreenSky, a pre-eminent fintech platform that offers home-improvement consumer loans, to augment its retail lending footprint. However, this April, the company disclosed its intention to sell GreenSky, with management declaring that the business was not in line with the bank’s “current strategic priorities.”
Also, at an industry conference earlier this month, management noted that the company may recognize an impairment of $500 million of goodwill related to the sale.
Goldman has undertaken a major business restructuring initiative to refocus its business on its core strengths of investment banking and trading while reducing its retail footprint. Hence, the sale is an apt fit with this strategic overhaul.
Last year, Goldman stopped lending out of Marcus, its digital consumer lending platform and sold $1 billion of legacy loans from this platform.
Consumer lending woes aside, the challenging macroeconomic backdrop is also affecting GS’ trading revenues. President and chief operating officer, John Waldron, revealed that the firm expected trading revenues to decline 25% year over year in second-quarter 2023 due to sluggish capital market activity, muted equities and fixed-income activity levels compared with the year-ago period.
Tougher comps from the prior year are also expected to weigh on the company’s year-over-year performance in the Global Banking and Markets segment in second-quarter 2023. Rising interest rates and a rise in commodities business due to volatile energy markets due to the Ukraine war drove higher market activity levels in second-quarter 2022. This propelled revenues in market-oriented businesses.
Over the past six months, shares of GS have lost 4.9% compared with the industry’s decline of 10.1%.
As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
Per the people with knowledge of the matter, BCS has started the divestiture process for a portfolio of mainly performing loans to individuals, while the package also includes non-performing mortgages and high-risk loans in Swiss francs.
Citizens Financial Group, Inc. (CFG - Free Report) announced that it will stop originating indirect auto loans, effective from Jul 1, 2023. The decision was taken as part of CFG’s strategy to optimize its balance sheet and concentrate on relationship-based lending.
CFG began to reduce the number of active dealer relationships and de-emphasize its auto loan origination volume in third-quarter 2022. Nonetheless, the existing auto loans on its balance sheet will be retained and serviced by CFG.
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Goldman's (GS) GreenSky Gets Buyout Offers From Investment Firms
The Goldman Sachs Group, Inc.’s (GS - Free Report) consumer lending platform GreenSky has received buyout offers from investment firms Apollo Global Management, Sixth Street and Warburg Pincus. The news was reported by Semafor that cited people familiar with the matter.
Some bids are for GreenSky’s loan-writing operations, while others are for legacy loans on Goldman’s books. The bids value GreenSky at “mid-nine figures”, per the report. Notably, in March 2022, Goldman completed its purchase of GreenSky in an all-stock transaction valued at around $2.24 billion.
GS had acquired GreenSky, a pre-eminent fintech platform that offers home-improvement consumer loans, to augment its retail lending footprint. However, this April, the company disclosed its intention to sell GreenSky, with management declaring that the business was not in line with the bank’s “current strategic priorities.”
Also, at an industry conference earlier this month, management noted that the company may recognize an impairment of $500 million of goodwill related to the sale.
Goldman has undertaken a major business restructuring initiative to refocus its business on its core strengths of investment banking and trading while reducing its retail footprint. Hence, the sale is an apt fit with this strategic overhaul.
Last year, Goldman stopped lending out of Marcus, its digital consumer lending platform and sold $1 billion of legacy loans from this platform.
Consumer lending woes aside, the challenging macroeconomic backdrop is also affecting GS’ trading revenues. President and chief operating officer, John Waldron, revealed that the firm expected trading revenues to decline 25% year over year in second-quarter 2023 due to sluggish capital market activity, muted equities and fixed-income activity levels compared with the year-ago period.
Tougher comps from the prior year are also expected to weigh on the company’s year-over-year performance in the Global Banking and Markets segment in second-quarter 2023. Rising interest rates and a rise in commodities business due to volatile energy markets due to the Ukraine war drove higher market activity levels in second-quarter 2022. This propelled revenues in market-oriented businesses.
Over the past six months, shares of GS have lost 4.9% compared with the industry’s decline of 10.1%.
Image Source: Zacks Investment Research
Currently, GS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restructuring Efforts by Companies
As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
Per the people with knowledge of the matter, BCS has started the divestiture process for a portfolio of mainly performing loans to individuals, while the package also includes non-performing mortgages and high-risk loans in Swiss francs.
Citizens Financial Group, Inc. (CFG - Free Report) announced that it will stop originating indirect auto loans, effective from Jul 1, 2023. The decision was taken as part of CFG’s strategy to optimize its balance sheet and concentrate on relationship-based lending.
CFG began to reduce the number of active dealer relationships and de-emphasize its auto loan origination volume in third-quarter 2022. Nonetheless, the existing auto loans on its balance sheet will be retained and serviced by CFG.