Citigroup Invests in Pylon to Modernize Mortgage Industry
Citigroup, Inc. C has made a minority investment in Pylon — a mortgage infrastructure provider. Financial terms of the investment were kept under wraps.
Understanding Pylon’s Mission
Founded in 2022, Pylon seeks to transform the mortgage landscape. Its platform utilizes an enterprise-grade application programming interface (API) to facilitate programmatic funding and mortgage originations. Various sectors, including wealth management, homebuilding, service providers, banks, and certain lenders, are benefiting from Pylon’s innovative solutions.
Details of the Investment
Citigroup’s investment stems from its Spread Products Investment Technologies (“SPRINT”) unit and Citigroup Ventures. This partnership sees Citigroup joining Pylon’s existing group of investors, which includes Conversion Capital, Allegis Capital, Peter Thiel, QED, and Fifth Wall.
The collaboration will integrate the Pylon platform with the robust liquidity offered by Citigroup’s mortgage trading desk. As a result, Pylon customers can directly access Citigroup’s institutional-grade rates and offerings.
Moreover, Citigroup’s investment is expected to streamline the mortgage origination process and provide interim funding to consumers until their loans enter the capital markets, ultimately reducing origination costs.
Through the trading desk, Citigroup can purchase Pylon’s mortgages, pending adherence to specific underwriting standards, and further decide on packaging these into mortgage-backed securities or reselling them.
Statements from Management
“We’re pleased to have secured this investment from Citi, which marks a significant milestone for Pylon,” stated Trent Hedge, founder and CEO of Pylon. “Our connectivity with Citi’s mortgage trading desk delivers the same unobstructed access to Wall Street that was previously only available to the largest market participants,” he added.
“Pylon’s next-generation, multi-product platform is built on an intelligent core. We’re excited to launch this strategic initiative and apply the scale of our industry-leading Spread Products business to Pylon,” remarked Patrick Brett, head of Citi SPRINT Investments.
Citigroup’s Performance Overview
Over the past six months, Citigroup’s shares have risen by 15.3%, in contrast to the industry growth of 28.8%.
Image Source: Zacks Investment Research
Currently, Citigroup holds a Zacks Rank #3 (Hold).
Stocks Worth Watching
Investors might consider other well-ranked bank stocks such as Raymond James Financial, Inc. RJF and BGC Group, Inc. BGC, both carrying a Zacks Rank #1 (Strong Buy) at this time. You can see the complete list of today’s Zacks #1 Rank stocks here.
Recently, the earnings forecast for RJF has been raised by 4.2% for 2024. Its shares have surged by 40.8% over the last six months.
Similarly, earnings projections for BGC have increased by 6.5% for 2024. Over the past six months, BGC shares have risen by 18.1%.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
