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KEY TAKEAWAYS
- Affirm forged a $4 billion financing partnership with Sixth Street, in the latest commitment by a private credit firm into a fintech company.
- Sixth Street is putting the money into a vehicle that will buy Affirm’s loans over three years in a deal the companies said is the largest capital commitment secured by the buy now, pay later (BNPL) firm.
- The investment will in turn give Affirm the ability to lend more than $20 billion in loans over the next three years, they said.
Affirm (AFRM) forged a $4 billion financing partnership with Sixth Street, in the latest commitment by a private credit firm into a fintech company.
Affirm shares rose about 2% in intraday trading Friday after the announcement.
Sixth Street is putting in the money into a vehicle that will buy Affirm’s loans over three years in a deal the companies said is the largest capital commitment secured by the buy now, pay later (BNPL) firm.
The investment will in turn give Affirm the ability to lend more than $20 billion in loans over the next three years, they said.
Fintech Firms Have Been Tapping Private Credit for Funds
Fintech companies have been tapping the fast-growing private credit industry for funds in the past few years. Last year, PayPal (PYPL) struck a deal with private equity firm KKR (KKR) allowing the private equity firm to purchase the fintech firm’s BNPL loans in Europe.
In October, SoFi Technologies (SOFI) struck a $2 billion deal with Fortress Capital to grow its personal loans business.
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 shares have more than doubled in value in the past six months, underscoring the explosive growth of companies in the BNPL space.
