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Goldman Sachs CEO David Solomon speaks at the 2023 Forbes Iconoclast Summit at Pier 60 on June 12, 2023 in New York City.
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Goldman Sachs is likely to take a big write-off for the 2021 acquisition of fintech lender GreenSky after trying to unburden the company, CNBC has learned.
According to those with knowledge of the sales process, bids for the installment loan are well below what Goldman had hoped.
Under CEO David Solomon, Goldman bought Atlanta-based GreenSky for $2.24 billion to accelerate its foray into consumer finance. But just 18 months after the bank’s September 2021 release announcing the deal, Solomon said he was selling the company after mounting losses and dysfunction in Goldman’s consumer division forced a strategic shift.
KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank were among the asset managers and lenders involved in the first round of bidding, which began in early June, according to people who declined to be identified over the sale. The companies declined to comment.
“Everyone is coming in low and the Goldman team keeps pushing back and pounding the table on its value,” said one of the bidders.
The bank will continue negotiations with a smaller group of bidders this week in hopes of raising the final price, the sources said.
Two-track process
Goldman has been pursuing offers for GreenSky’s lending business and its book of existing loans separately, as well as single deal offers, according to the known people.
One bidder said the origination platform is worth about $300 million, while another said it was worth nearly $500 million.
If a deal closed anywhere near that valuation, it would represent a hefty discount to what Goldman paid for it, forcing the company to declare a markdown that will reach earnings in a quarter to come.
While the all-stock acquisition was announced at a valuation of $2.24 billion, according to a person with knowledge of the matter, it was worth closer to $1.7 billion by the time the transaction closed six months later.
Goldman president John Waldron acknowledged the potential for “some noise” to the bank’s results from the sale of GreenSky. The transaction could wipe out $500 million in goodwill associated with buying the lender, and the loan sale could trigger other one-time accounting hits, he told analysts at a June 1 conference.
The turbulence marks the latest fallout from Solomon’s decision to shut down most of the bank’s consumer efforts after pushing hard for his vision to transform Goldman into a fintech disruptor.
“We welcome the participation of bidders,” Goldman spokesman Tony Fratto said in a statement. “We’re in the middle of the process and we’ll learn more as we go along.”
Goldman Sachs stands for write-off on David Solomon’s
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