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Goldman (GS) Closes GreenSky Sale in Pivot From Consumer Finance
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The Goldman Sachs Group, Inc. (GS - Free Report) has completed the sale of GreenSky, its home-improvement lending platform, to a consortium that includes KKR, Bayview Asset Management and CardWorks, and is led by investment firm Sixth Street Partners.
GreenSky offers point-of-sale (POS) technology to connect home improvement contractors with consumers for loan originations.
GreenSky was acquired by GS in 2022 for $1.7 billion. However, in October 2023, the company announced intentions to dispose of the business in a major business restructuring initiative.
When the sale was announced, David Solomon, chairman and CEO of Goldman, stated, “This transaction demonstrates our continued progress in narrowing the focus of our consumer business. While GreenSky is an attractive business, we are focused on advancing the strategy we laid out for our two core franchises. In Global Banking & Markets, we’ve improved our wallet share and are demonstrating strong growth in financing activities; and across our Asset & Wealth Management platform, we are making very strong progress towards both our fundraising and management fee targets.”
In fourth-quarter 2023, the company completed the sale of a majority of the GreenSky installment loan portfolio. It also entered an agreement with General Motors (GM - Free Report) to transition GM’s credit card program to another issuer to be chosen by GM.
GS will now focus on its two core businesses — the Global Banking and Markets segment, and the Asset and Wealth Management segment.
In 2023, Goldman was ranked in the top position in worldwide announced and completed mergers and acquisitions (M&As), equity and equity-related offerings, and common stock offerings. This likely gives it an edge over its peers. Strong M&A activities drove record investment banking (IB) revenues in 2021 on the back of stellar performances in financial advisory, equity underwriting and debt underwriting activities. However, IB revenues declined in 2022 and 2023 due to muted global M&A deal value and volumes.
Nonetheless, Goldman witnessed strong improvement in its M&A backlog in fourth-quarter 2023. It expects various initial public offerings in 2024. We believe that robust client engagement, backed by digital disruption and transformation trends, signs of growing M&A and underwriting pipelines, and the company’s decent IB backlog will support IB revenues in the upcoming period. We expect IB fees to rise 8.8% and 3.4% year over year in 2024 and 2025, respectively.
Ally Financial Inc. (ALLY - Free Report) completed the divestiture of its POS financing business — Ally Lending (that includes $2.2 billion of loan receivables as of Dec 31, 2023) — to Synchrony. The move reflects ALLY's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The deal was announced in January. At that time, ALLY expected the divestiture to bolster its Common Equity Tier 1 ratio by almost 15 basis points at closing. Further, the deal is projected to be modestly accretive to tangible book value and earnings per share this year.
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Goldman (GS) Closes GreenSky Sale in Pivot From Consumer Finance
The Goldman Sachs Group, Inc. (GS - Free Report) has completed the sale of GreenSky, its home-improvement lending platform, to a consortium that includes KKR, Bayview Asset Management and CardWorks, and is led by investment firm Sixth Street Partners.
GreenSky offers point-of-sale (POS) technology to connect home improvement contractors with consumers for loan originations.
GreenSky was acquired by GS in 2022 for $1.7 billion. However, in October 2023, the company announced intentions to dispose of the business in a major business restructuring initiative.
When the sale was announced, David Solomon, chairman and CEO of Goldman, stated, “This transaction demonstrates our continued progress in narrowing the focus of our consumer business. While GreenSky is an attractive business, we are focused on advancing the strategy we laid out for our two core franchises. In Global Banking & Markets, we’ve improved our wallet share and are demonstrating strong growth in financing activities; and across our Asset & Wealth Management platform, we are making very strong progress towards both our fundraising and management fee targets.”
In fourth-quarter 2023, the company completed the sale of a majority of the GreenSky installment loan portfolio. It also entered an agreement with General Motors (GM - Free Report) to transition GM’s credit card program to another issuer to be chosen by GM.
GS will now focus on its two core businesses — the Global Banking and Markets segment, and the Asset and Wealth Management segment.
In 2023, Goldman was ranked in the top position in worldwide announced and completed mergers and acquisitions (M&As), equity and equity-related offerings, and common stock offerings. This likely gives it an edge over its peers. Strong M&A activities drove record investment banking (IB) revenues in 2021 on the back of stellar performances in financial advisory, equity underwriting and debt underwriting activities. However, IB revenues declined in 2022 and 2023 due to muted global M&A deal value and volumes.
Nonetheless, Goldman witnessed strong improvement in its M&A backlog in fourth-quarter 2023. It expects various initial public offerings in 2024. We believe that robust client engagement, backed by digital disruption and transformation trends, signs of growing M&A and underwriting pipelines, and the company’s decent IB backlog will support IB revenues in the upcoming period. We expect IB fees to rise 8.8% and 3.4% year over year in 2024 and 2025, respectively.
Shares of this Zacks Rank #3 (Hold) company have gained 12.8% in the past six months, outperforming the industry’s growth of 11.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Business Exit by Another Finance Company
Ally Financial Inc. (ALLY - Free Report) completed the divestiture of its POS financing business — Ally Lending (that includes $2.2 billion of loan receivables as of Dec 31, 2023) — to Synchrony. The move reflects ALLY's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The deal was announced in January. At that time, ALLY expected the divestiture to bolster its Common Equity Tier 1 ratio by almost 15 basis points at closing. Further, the deal is projected to be modestly accretive to tangible book value and earnings per share this year.