Castlelake Agrees to Purchase up to $1.2 Billion of Consumer Installment Loans Originated on Upstart's Platform

Rhea-AI Summary

Castlelake, a global alternative investment manager specializing in asset-based private credit investments, has agreed to purchase up to $1.2 billion of consumer installment loans originated on Upstart's AI lending marketplace. The 12-month forward flow arrangement builds on a previous 2023 agreement between the two companies. Upstart, which connects millions of consumers to over 100 banks and credit unions using AI for loan approval, benefits from this deal by ensuring a steady capital supply for affordable credit. Castlelake's decision is based on its experience in acquiring or financing over 17 million consumer credit and small business loans. This transaction further solidifies Castlelake's role in the consumer credit and specialty finance sector since 2015.

Positive

• Castlelake's agreement to purchase up to $1.2 billion of consumer installment loans provides a significant capital influx for Upstart.
• The deal ensures a resilient supply of capital for Upstart, facilitating expanded access to affordable credit.
• Castlelake's extensive experience in consumer credit and small business loans acquisition supports the validity and potential of the investment.

Negative

• Dependence on a single investor like Castlelake may pose a concentration risk for Upstart.
• Market conditions and economic environment could impact the attractiveness of the investment over time.

News Market Reaction

-1.53%

1 alert

-1.53% News Effect

On the day this news was published, UPST declined 1.53%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

MINNEAPOLIS, June 20, 2024 /PRNewswire/ -- Castlelake, L.P. ("Castlelake"), a global alternative investment manager specializing in asset-based private credit investments, has reached an agreement to purchase up to $1.2 billion of consumer installment loans from Upstart (NASDAQ: UPST), an artificial intelligence (AI) lending marketplace. The purchase agreement consists of a 12-month forward flow arrangement and follows a 2023 agreement with Upstart.

Upstart connects millions of consumers to more than 100 banks and credit unions that leverage Upstart's AI to approve more borrowers at lower rates, while delivering the exceptional digital-first experience customers demand. Castlelake's experience acquiring or financing more than 17 million consumer credit and small business loans informed its investment decision.

"Castlelake is pleased to reach an additional purchase agreement with Upstart and to continue supporting its mission to provide affordable credit," said John Lundquist, Partner, Specialty Finance at Castlelake. "We believe that the utility of credit is becoming even more valuable to consumers in the current economic environment, and that the asset class presents an attractive investment opportunity for investors seeking cash-flowing exposure."

"We're thrilled to keep building on the strong relationship that we've established with the experienced team at Castlelake," added Sanjay Datta, Chief Financial Officer of Upstart. "This extension will help ensure a resilient supply of capital to expand access to affordable credit." 

The transaction is a recent example of Castlelake's participation in the consumer credit and specialty finance sector, where it has both acquired assets and provided asset-based private credit to consumer and small and medium-sized business originators since 2015. Other specialty finance transactions include a $200 million private structured financing solution for the origination of personal loan products, a £100 million facility commitment for a fintech company focused on expanding its revenue-based financing solution, and an agreement to provide credit to a tech-enabled specialty finance lender for small and medium-sized businesses.

About Castlelake 

Castlelake, L.P. is a global alternative investment manager focused on asset-based investments in the private specialty finance, real assets and aviation markets. Founded in 2005, Castlelake manages approximately $22 billion of assets on behalf of a diversified global investor base. The Castlelake team comprises more than 220 experienced professionals, including 80 investment professionals, across seven offices in North America, Europe and Asia. For more information, please visit www.castlelake.com.   

Contact

Castlelake

Prosek Partners for Castlelake
Josh Clarkson/Remy Marin
+1 212 279 3115
jclarkson@prosek.com / rmarin@prosek.com 

Castlelake Media Relations
media.relations@castlelake.com

 

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SOURCE Castlelake

FAQ

What is the value of the consumer installment loans Castlelake agreed to purchase from Upstart?

Castlelake agreed to purchase up to $1.2 billion of consumer installment loans from Upstart.

What is the duration of the purchase agreement between Castlelake and Upstart?

The purchase agreement is a 12-month forward flow arrangement.

How many consumer credit and small business loans has Castlelake acquired or financed before this agreement?

Castlelake has acquired or financed over 17 million consumer credit and small business loans.

How does Upstart use AI in its lending platform?

Upstart uses AI to connect millions of consumers to over 100 banks and credit unions, enabling more loan approvals at lower rates.

What impact does this purchase agreement have on Upstart's capital supply?

The agreement ensures a resilient supply of capital for Upstart, which helps expand access to affordable credit.