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Cheat Sheet: What’s going on behind Goldman Sachs’ acquisition of BNPL GreenSky?

  • Goldman Sachs has acquired BNPL firm GreenSky for $2.24 billion, with the transaction expected to finish by Q4 2021 or Q1 2022.
  • GreenSky's platform and team will be integrated with Marcus by Goldman Sachs.
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Cheat Sheet: What’s going on behind Goldman Sachs’ acquisition of BNPL GreenSky?

Goldman Sachs announced it’s reached an agreement to acquire buy now, pay later firm GreenSky for $2.24 billion in an all-stock transaction. The acquisition saw GreenSky’s share surge 53% on the news and reflected Goldman’s interest in growing its consumer lending business. 

The transaction details:

  1. The all-stock deal puts the per-share price for GreenSky stock at $12.11, making the implied transaction value approximately $2.24 billion.
  2. The deal, announced last Wednesday, values GreenSky at more than 50% above the previous day’s closing price.
  3. Goldman Sachs expects the transaction to close by the fourth quarter of 2021 or the first of 2022.
  4. GreenSky CEO David Zalik will join Goldman Sachs as a partner, and his team will move to Marcus.

What’s in it for the two parties?

Goldman Sachs aims to ramp up its consumer finance business and integrate GreenSky with its own BNPL platform Marcus. 

GreenSky has a network of 10,000 merchants and competes primarily in consumer installment lending in the home improvement space. GreenSky services a loan portfolio of $9 billion and has provided home renovation loans worth over $30 billion to approximately four million customers since its founding in 2006. 

Marcus has been building up its own operations — allowing users to save, spend, borrow and invest — and working on ways to meet consumers where they transact. Last year, MarcusPay struck a deal with JetBlue to offer a Fly Now, Pay Later alternative to the airline’s flights and vacation packages. A similar partnership was entered with Apple, allowing consumers to pay for any Apple Pay purchase in installments over time, with Goldman Sachs serving as the lender. In yet another deal, Goldman Sachs and Walmart partnered to offer the retailer’s Marketplace sellers a line of credit, offered by Marcus.

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Part of Goldman Sachs’ strategy with Marcus’ lending arm is to reach new customers through direct channels, and second, to embed its lending within top brands’ platforms, like it’s doing with Apple Card. This acquisition allows Goldman to make progress on both these fronts: by gaining the ability to reach GreenSky’s customer base and by providing its BNPL option to merchants who then offer it at the point of sale. The deal also allows the bank to tap into the $430 billion home improvement market through GreenSky’s pioneering work in the space.

“GreenSky and its talented team have built an impressive, cloud-native platform that will allow Marcus to reach a new and active set of merchants and customers and provide them with an expanding set of solutions. We welcome the GreenSky team to the Goldman Sachs family,” said David M. Solomon, Chairman, and CEO of Goldman Sachs.

GreenSky is hopeful the acquisition will help usher in a new phase of growth. The platform’s unique competence and growing user base coupled with Marcus’ expanding product range will create a compelling banking platform positioned for significant growth. The ability to lend off of Goldman Sachs’ balance sheet will enable the BNPL firm to offer more distinct products to both sellers and buyers, and service a greater quantity of loans.

“From GreenSky’s inception, our mission has been to deliver exceptional value, helping businesses grow and delight their customers. In combination with Goldman Sachs, we’re excited to continue delivering innovative point-of-sale payment solutions for our merchant partners and their customers on an accelerated basis,” said David Zalik, CEO of GreenSky.

What else is new in the BNPL industry?

  1. Square announced it is acquiring BNPL Afterpay, in an all-stock deal worth $29 billion. The transaction is expected to close by the first quarter of 2022.
  2. PayPal is acquiring Japanese fintech Paidy, a two-sided payments and BNPL platform, for $2.7 billion, principally in cash. 
  3. Affirm went public earlier this year, valuing the firm at $12 billion. The company recently struck a partnership with Amazon to help customers break up purchases of $50 or more into smaller payments. Affirm already has partnerships in place with Walmart and Peloton.

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