Sixth Road is ready to take a position as much as $4bn (£3.1bn) in loans originated by buy-now-pay-later lender Affirm, the biggest capital dedication secured by the fintech so far.
The funding agency will present the capital by means of its asset-based finance platform, underneath a three-year, forward-flow settlement, whereby it agrees to purchase loans earlier than they’ve been originated.
The 2 corporations mentioned that the funding will allow Affirm to increase as much as greater than $20bn in loans over the subsequent three years because it continues to scale its cost community.
Learn extra: Asset-backed finance particular report: Using the wave
“We’re honoured to ascertain this new long-term partnership with Sixth Road as we proceed to strengthen and diversify our platform to assist our bold development plans with capital environment friendly funding,” mentioned Brooke Main-Reid, chief capital officer at Affirm. “Sixth Road’s experience in asset-based finance, long-term capital and collaborative strategy make them a great associate for Affirm. During the last a number of years, we’ve got been extraordinarily considerate in working with a various mixture of world-class buyers as we empower extra shoppers and retailers with our sincere monetary merchandise.”
Michael Dryden, associate and head of asset based mostly finance at Sixth Road, added: “Affirm’s skill to offer versatile, scalable financing options is unparalleled, and we see super alternative on this partnership.
“We sit up for being a key funding associate for Affirm and persevering with to construct on this relationship to assist the corporate’s development within the years to come back.”
The asset-based finance market, which incorporates automotive loans and residential mortgages, is rising at a fast tempo. KKR expects the market to develop from its present measurement of $5.2tn, to $7.7tn by 2027. Goldman Sachs believes the ABF market is already value greater than $15tn.
Non-public credit score corporations have been tapping into this chance, with a wave of recent methods and merchandise.
Earlier this yr, Ares Administration introduced a $1.5bn three way partnership to fund prime new car leases with Licensed Automotive Lease Corp. Across the identical time, SEC filings revealed that Pacific Funding Administration Co (Pimco) had raised greater than $2bn for its asset-based lending technique over the summer time months.