By Saeed Azhar and Niket Nishant
NEW YORK -Goldman Sachs has agreed to sell GreenSky, its home improvement lender, and associated loans to a consortium led by investment firm Sixth Street Partners, it said on Wednesday.
Goldman did not disclose the value of the deal, but said it will take a charge of 19 cents per share for the third quarter; Goldman will announce earnings on Tuesday. The transaction is expected to close in the first quarter, the bank said.
The Wall Street powerhouse bought GreenSky in a deal with a $1.7 billion valuation last year. The sale is Goldman's latest step in scaling back its retail operations to refocus on its traditional mainstays, investment banking and trading.
"This transaction demonstrates our continued progress in narrowing the focus of our consumer business," Goldman CEO David Solomon said in a statement.
While GreenSky is an "attractive business," Solomon said, the bank is focused on growing its financing activities in banking and markets, while seeking to raise more money and fees from its asset and wealth management arm.
The charge on earnings equates to about $62 million, according to Reuters calculations based on Goldman Sachs' outstanding shares.
The Wall Street Journal reported the deal is somewhere "in the neighborhood" of $500 million, citing people familiar with the matter. Goldman Sachs declined to comment on the price.
The buyer consortium led by Sixth Street also includes funds and accounts managed by KKR, Bayview Asset Management, and CardWorks, Goldman said in a statement. The deal also received "significant support" from Pacific Investment Management Co and strategic financing from CPP Investments.
"We plan to continue the company's legacy of driving growth through enhanced technology and great user experiences," said Alan Waxman, co-founder and CEO of Sixth Street.
Goldman acquired GreenSky during the COVID-19 pandemic as housebound consumers took on more renovations.
But demand for loans weakened as the pandemic subsided. Rising interest rates and more expensive building materials dampened consumer appetite for renovations.
Goldman's platform solutions unit, which houses GreenSky, lost nearly $3 billion in three years. Solomon has drawn criticism for the consumer flop, which has weighed on earnings for several quarters.