My MBA Career: Goldman Sachs Sells GreenSky BNPL Business

Last Updated on October 13, 2023 by Robert C. Hoopes

Goldman Sachs to Sell GreenSky, Signaling Setback in Consumer-Finance Push

Investment banking giant Goldman Sachs has announced its plans to sell GreenSky, a prominent player in the “buy now, pay later” lending industry. This move comes as a surprise, considering that Goldman Sachs acquired GreenSky just under two years ago. However, it seems to highlight a setback in the bank’s ambitions within the consumer-finance sector.

According to reports, Goldman Sachs is anticipated to report an immediate loss from this transaction during its upcoming third-quarter earnings release. The bank will be selling GreenSky to a group of money managers, including private-equity firms Sixth Street and K.K.R. However, the exact selling price has not yet been disclosed.

In 2021, the buy now, pay later industry and Goldman Sachs’ outlook seemed optimistic when the bank paid a hefty $1.7 billion to acquire GreenSky. Nevertheless, the sector has faced significant challenges due to rising interest rates. As a result, borrowers have become wary of taking on higher-priced loans, impacting the profitability of buy now, pay later businesses.

Goldman Sachs’ consumer banking division has undoubtedly faced its fair share of obstacles, prompting the bank to shift its focus away from this particular sector. The decision to divest from GreenSky aligns with previous indications given by executives at Goldman Sachs.

The buy now, pay later sector has emerged as a popular alternative to traditional credit cards and has witnessed significant growth in recent years. Its appeal lies in its flexibility, allowing consumers to split payments into manageable installments. However, with the current economic climate and cautious consumers, companies in the industry have faced increased scrutiny and challenges.

As Goldman Sachs looks to refine its strategic focus, the sale of GreenSky represents a shift away from its previous consumer-finance ambitions. While the exact implications and repercussions of this decision remain to be seen, it undoubtedly marks a notable development in the bank’s trajectory within the lending sector.

Overall, this move by Goldman Sachs to sell GreenSky reflects the changing landscape of the buy now, pay later sector and the challenges faced by major players. As the industry grapples with rising interest rates and cautious consumers, financial institutions like Goldman Sachs are forced to reassess their positions and priorities.