The Goldman Sachs Group, Inc. GS has finalized the sale of GreenSky, its home-improvement lending platform, to a consortium that includes KKR, Bayview Asset Management, and CardWorks, and is spearheaded by investment firm Sixth Street Partners.
GreenSky facilitates point-of-sale (POS) technology to link home improvement contractors with consumers for loan originations.
Acquired by GS in 2022 for $1.7 billion, GreenSky faced a new chapter when Goldman Sachs announced intentions to divest in October 2023 as part of a sweeping business restructuring initiative.
Upon announcement of the sale, David Solomon, chairman and CEO of Goldman, emphasized, “This transaction underscores our ongoing commitment to refining the focus of our consumer business. While GreenSky possesses appeal, we are resolute in advancing the strategy outlined for our two core franchises. In Global Banking & Markets, we have bolstered our wallet share with robust growth in financing activities. Across our Asset & Wealth Management platform, significant progress has been made towards both fundraising and management fee targets.”
In the fourth quarter of 2023, the company concluded the sale of a large portion of the GreenSky installment loan portfolio. Additionally, an agreement was struck with General Motors GM to transition GM’s credit card program to another issuer, as chosen by GM.
GS now sets its sights squarely on its two main businesses — the Global Banking and Markets segment, and the Asset and Wealth Management segment.
In 2023, Goldman clinched the top spot in global announced and completed mergers and acquisitions (M&As), equity and equity-related offerings, and common stock offerings. This significant achievement likely positions it advantageously against its competitors. The surge in M&A activity drove record investment banking revenues in 2021, propelled by stellar performances in financial advisory, equity underwriting, and debt underwriting. However, IB revenues tapered off in 2022 and 2023 due to subdued global M&A deal value and volumes.
Nevertheless, Goldman observed a marked improvement in its M&A backlog in the fourth quarter of 2023. The company anticipates multiple initial public offerings in 2024. The confluence of robust client engagement, fueled by digital disruptions and transformation trends, alongside indications of burgeoning M&A and underwriting pipelines, coupled with the company’s solid IB backlog, is poised to bolster IB revenues in the forthcoming period. Projections indicate a year-over-year increase of 8.8% and 3.4% in IB fees for 2024 and 2025, respectively.
Shares of this Zacks Rank #3 (Hold) company have surged by 12.8% in the last six months, outperforming the industry’s growth of 11.8%. For a comprehensive overview of today’s Zacks #1 Rank (Strong Buy) stocks, click here.
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Departure from the Finance World: Ally Financial’s Strategic Move
Ally Financial Inc. ALLY concluded the sale of its POS financing business — Ally Lending (inclusive of $2.2 billion in loan receivables as of December 31, 2023) — to Synchrony. This move underscores ALLY’s commitment to optimizing its capital allocation and directing resources towards high-growth areas.
The deal, unveiled in January, was expected to fortify ALLY’s Common Equity Tier 1 ratio by nearly 15 basis points upon closing. Additionally, the transaction is anticipated to have a modestly uplifting impact on tangible book value and earnings per share for the current year.
Infrastructure Stock Surge Set to Ripple Across America
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The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
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The perspectives and opinions presented here are the author’s own and do not necessarily mirror those of Nasdaq, Inc.
