Takeaways from the Key Notes
- Affirm and Sixth Street have formed a financing partnership worth $4 billion, the latest investment by a private firm in a fintech startup.
- Sixth Street invests the money in a company that will pay Affirm over a three-year period. This is, according to the firms, the largest capital investment secured by the Buy Now Pay Later (BNPL) business.
- They said that the investment would allow Affirm to provide more than 20 billion dollars in loan over the next 3 years.
Affirm, a credit-based private company, has teamed up with Sixth Street to finance $4 billion in a new fintech partnership.
Affirm stock rose approximately 2% on intraday trade Friday, following the announcement.
Sixth Street will invest the funds into a vehicle which will purchase Affirm’s loans for a period of three years. The companies claim that this is the biggest capital commitment made by the firm Buy Now, Pay Later (BNPL).
They said that the investment would allow Affirm to provide more than 20 billion dollars in loan over the next 3 years.
Fintech companies have used private credit for funds
In recent years, fintech firms have turned to the rapidly growing private credit sector for funding. PayPal (PYPL), a fintech company, struck a deal last year with KKR to allow the firm to buy the firm’s BNPL (Bonds Not Payable) loans across Europe.
SoFi Technologies, (SOFI), signed a deal worth $2 billion with Fortress Capital in October to expand its business of personal loans.
Affirm rival Klarna, which filed for a U.S. initial public offering (IPO) last month, sold its U.K. BNPL portfolio to U.S. hedge fund Elliott Investment Management also in October, in a deal it said would fund 30 billion pounds ($38 billion) in loans.
Affirm’s shares are up more than twice as much in six months. This highlights the rapid growth in the BNPL sector.
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Business Wire “Affirm and Sixth Street Announce Long-Term Capital Partnership to Invest up to $4 Billion in Affirm Loans.”
Klarna. “Klarna to fuel £30bn expansion with UK loans partnership.”
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