Blue Owl Capital has agreed to purchase as much as $2bn (£1.5bn) of shopper loans from fintech lender Upstart over the subsequent 18 months, because it expands within the asset-based finance area.
The deal consists of an preliminary acquisition of a $290m private mortgage portfolio, which closed in September.
The transaction was structured and closed by Atalaya Capital Administration, an alternate credit score supervisor primarily targeted on asset-based finance that Blue Owl acquired earlier this 12 months.
Atlas SP Companions, the warehouse finance and securitised merchandise enterprise majority owned by Apollo funds, will present the debt financing for the mortgage purchases.
Learn extra: Personal debt traders eye asset-backed lending over the subsequent 12 months
“We’re thrilled to companion with the Blue Owl staff in one in every of our largest buy commitments ever,” mentioned Sanjay Datta, chief monetary officer of Upstart. “Blue Owl’s formidable imaginative and prescient and long-term focus will speed up our efforts to develop entry to inexpensive credit score.”
The asset-backed finance (ABF) market is attracting consideration from various asset managers after business banks scaled again their actions within the area.
Earlier this 12 months, Oaktree famous that “ABF has been remodeled from a low-return, bank-dominated asset class right into a extremely enticing space of alternative for various lenders”.
BlackRock has additionally seen alternatives on this space. ABF is estimated to be a $5.5tn market within the US. Round a 3rd of this market is financed by non-bank lenders, in line with Oliver Wyman information cited by BlackRock, with the personal credit score trade’s present market share estimated to be $200-$300bn.
“Whereas the idea of diversification away from the financial institution lending channel just isn’t new, over the previous a number of months, market individuals have targeted on the potential for personal credit score lenders to play an elevated function in ABF, probably filling ‘financing gaps’ from some banks’ extra selective urge for food to lend (as they might look to optimize the capital effectivity of their stability sheets),” BlackRock’s evaluation mentioned.
