Goldman Sachs agrees to sell GreenSky, warning that the transaction will result in a 19 cent decrease in earnings per share for Q3.
Goldman Sachs announced on Wednesday that it has agreed to sell its financial technology lending platform, GreenSky, to a group of investors led by private equity firm Sixth Street.
According to the Zhongtong Finance APP, Goldman Sachs (GS.US) announced on Wednesday that it has agreed to sell its financial technology loan platform, GreenSky, to a group of investors led by private equity firm Sixth Street (TSLX.US). In a statement, Goldman Sachs said that the transaction includes the loan book created by the bank and will result in a decrease of 19 cents per share in earnings for the third quarter. The bank is scheduled to announce its performance before the opening of the US stock market on October 17th.
This move is the latest effort by Goldman Sachs CEO David Solomon to reduce its presence in the retail banking business. Under Solomon's guidance, Goldman Sachs acquired GreenSky for $1.7 billion last year, overturning the opinions of those who believed that this home improvement loan institution was not suitable for Goldman Sachs. However, a few months later, Solomon decided to seek a sale of the business as part of a broader move away from the consumer finance sector. Goldman Sachs has also sold a wealth management business and reportedly is in negotiations to sell its Apple Card business.
Solomon said in a press release, "This transaction demonstrates our continued progress in narrowing our focus on consumer businesses."
He added that the bank is currently focused on its core strengths in investment banking and trading, and is working to increase asset and wealth management fees.
Goldman Sachs stated that it will continue to operate GreenSky until the completion of the transaction in the first quarter of 2024.
Goldman Sachs said that the expected impact on third-quarter earnings includes expenses related to the impairment of intangible assets associated with GreenSky, as well as mark-to-market adjustments and higher taxes on the loan portfolio, which are offset by the release of loan loss reserves related to the transaction.
Prior to this, GreenSky reported a depreciation of $504 million in the second quarter.
According to the statement, the group of investors led by Sixth Street includes funds managed by KKR (KKR.US), Bayview Asset Management, and CardWorks Management.
Since the beginning of this year, private equity groups have played a key role in the divestment of assets in the banking industry, providing funding for mergers such as PacWest (PACW.US) and Banc of California (BANC.US).