Who’s the Most Valuable Online Lender? After This Deal, It’s GreenSky
The financial-technology firm raised $200 million in new equity from Pacific Investment Management, valuing it at nearly $4.5 billion
January 2, 2018 – by Peter Rudegeair
Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.
The $200 million investment, announced in a securities filing Thursday, is the latest in a series of cash infusions for companies that arrange credit for purchases of consumer goods and services.
It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. FinTech company behind Stripe Inc., which processes payments for Internet businesses.
Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.
Founded in 2006, GreenSky operates a lending platform that enables home improvement retailers including Home Depot Inc., health-care providers and over 16,000 other merchants and contractors to offer credit to their customers. GreenSky arranges loans and lines of credit of up to $55,000, which are funded by a network of banks, including Fifth Third Bancorp, SunTrust Banks Inc. and Regions Financial Corp.
Banks and investors are increasingly backing companies that specialize in retail purchase financing. Affirm Inc., which works with companies such as Expedia Inc. and Wayfair Inc., said in December that it raised $200 million to bulk up its offerings. In November, Synchrony Financial reached a deal with PayPal Holdings Inc. to fund the payments company’s lending program and acquire a $6 billion portfolio of loans PayPal made to online shoppers.
GreenSky plans to use the fresh funds for general corporate purposes and is exploring over time whether it makes sense to enter other categories of so-called point-of-sale financing, the person said. In recent months, the company has also raised more than $300 million in debt, the person added.
Earlier investors in GreenSky include private-equity firm TPG, wealth-manager Iconiq Capital LLC and venture-capital firms DST Global and QED Partners. Investment bank Financial Technology Partners LP advised GreenSky on its latest fundraising.