Private equity group sets up vehicle that will allow US fintech to sharply lift its lending
Private investment group Sixth Street will pump $4bn into a vehicle to buy loans from US fintech Affirm in a deal that will give the lender firepower to make billions of dollars in additional consumer loans. The pact, which is expected to give Affirm the ability to make $20bn in new loans in the next three years, is the latest tie-up between a private credit fund and consumer credit provider, as the industry taps new avenues to lend to Americans struggling from years of high inflation.
The industry has been on a spree, buying student loans, credit card debt and a wave of bonds backed by solar panels, music catalogues and data centres. The investments in consumer debt come as the finances of many Americans show some signs of weakness, with higher interest rates weighing on households. Data from the Federal Reserve Bank of New York shows credit card and car loan delinquencies have picked up, although they remain within historic norms.
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