Goldman Sachs CEO David Solomon speaks at the 2023 Forbes Iconoclast Summit at Pier 60 on June 12, 2023 in New York City.
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Goldman Sachs Significant writedowns likely in 2021 get Fintech lender GreenSky sought to sell the business after it was turned down, CNBC has learned.
The bid for the installment loan business was well below Goldman’s expectations, according to people familiar with the sale process.
under the leadership of the chief executive david solomonGoldman Sachs then bought Atlanta-based GreenSky for $2.24 billion to help accelerate its foray into consumer finance. But just 18 months after Goldman made the deal announcement in September 2021, Solomon said he would sell the business as losses and dysfunction in Goldman’s consumer unit forced a strategic shift.
Asset managers and lenders including KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank participated in the first round of bidding, which opened in early June, according to the people, who asked not to be named. .
“Everybody’s bid is low and the Goldman Sachs team keeps fighting back, knocking on the table and discussing what it’s worth,” said one bidder.
The bank continued talks with a small group of bidders this week in hopes of raising the final price, the sources said.
two-track process
Goldman Sachs has been seeking separate offers for GreenSky’s loan origination business and its existing loan book, as well as for a single transaction, according to people familiar with the matter.
One bidder said the launch platform was worth about $300 million, while another said it was worth closer to $500 million.
If the deal closes at close to that valuation, it would represent a steep discount to what Goldman paid, forcing the company to disclose the write-down for the upcoming quarter.
Although the all-stock buyout was Announced Valued at $2.24 billion, it was valued at nearly $1.7 billion at the time of the transaction closure Six months later, according to a person familiar with the matter.
KKR, Synchrony and other bidders declined to comment for this article.Some bidders had earlier been appointed as traffic light.
President of Goldman Sachs John Waldron Acknowledging that the sale of GreenSky could add “some noise” to the bank’s results. The deal could wipe out $500 million of goodwill related to the acquisition of the lenders, while the sale of the loans could raise other one-time accounting issues, he told analysts at a June 1 conference. Meeting.
The turmoil marks the latest fallout from Solomon’s decision to exit much of the bank’s consumer business after struggling to realize its vision of transforming Goldman into a fintech disruptor.
“We are pleased with the bidders’ participation,” Goldman spokesman Tony Fratto said in a statement. “We are in the middle of the process and we will learn more as we go forward.” many.”
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