No Blue Skies for Goldman Sachs as It Looks to Sell GreenSky for Significant Loss
Key takeaways
- Investment bank Goldman Sachs is selling its fintech lender, GreenSky, after just two years
- Bidding is said to be much lower than the $2.24 billion Goldman paid and the bank may have to forget the $500 million goodwill premium it paid
- Goldman Sachs shares were down 1.5% at the news
Investment bank Goldman Sachs is admitting defeat on one of its recent acquisitions, fintech lender GreenSky, and could accept a significant loss on the purchase. As GreenSky goes up for sale again, let’s look at the market reaction and what went wrong.
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What’s the latest with Goldman Sachs?
Back in September 2021, Goldman Sachs bought fintech lender GreenSky for $2.24 billion. The troubled economy has led Goldman to reconsider recent purchases, and it’s put GreenSky back on the market — but apparently, the bids coming in are far lower than what the investment bank originally paid.
It’s believed that the bidders initially involved were Apollo Global Management, Sixth Street Partners and private equity firm KKR among others. Goldman faces a writedown on the $500 million goodwill premium it paid for the company — that’s gotta hurt.
The beleaguered bank is now looking to pull back from the consumer finance sector, with GreenSky’s sale possibly not the last to happen. “We’re in the middle of the process and we’ll learn more as we go forward,” a Goldman spokesperson said.
What was the market reaction?
Goldman Sachs shares dipped 1.4% at the news during Friday trading hours, eventually closing 1.52% down. The bank hasn’t had the best times with Wall Street in recent months, declining 9% this year as M&A activity continues to move at a glacial pace compared to 2021 and last year’s levels.
In comparison to its peers, Goldman has some catching up to do. JPMorgan has gained 2.76% in 2023, while Citigroup has gained 0.52% in the same period. Only the Bank of America has performed worse, with a 19% plunge in the share price in 2023.
The bottom line
The continued economic downturn has hit some banks harder than others, with Goldmans having to rethink its entire consumer business venture. It’s a hard reality for the bank, but in the long term leaves the path clear to focus on what it does best when M&A activity eventually picks up.
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