Goldman Sachs faces big writedown on CEO David Solomon’s ill-fated GreenSky deal

Goldman Sachs is apt to instrumentality a ample writedown for its 2021 acquisition of fintech lender GreenSky aft seeking to unload the business, CNBC has learned.

Bids for the installment-loan concern are coming successful good beneath what Goldman had hoped for, according to radical with cognition of the merchantability process.

Under CEO David Solomon, Goldman bought Atlanta-based GreenSky for $2.24 cardinal to assistance accelerate its propulsion into user finance. But conscionable 18 months aft the bank's September 2021 merchandise announcing the deal, Solomon said helium was selling the concern aft mounting losses and dysfunction successful Goldman's user part forced a strategical shift.

KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank were among the plus managers and lenders progressive successful the archetypal circular of bids, which began aboriginal June, according to the people, who declined to beryllium identified speaking astir the sale. The companies declined to comment.

"Everybody's been coming successful low, and the Goldman squad keeps pushing back, pounding the array astir the worth of it," said 1 of the bidders.

The slope is continuing negotiations with a smaller radical of bidders this week with the anticipation of ratcheting up the eventual price, according to the sources.

Goldman has been pursuing offers for GreenSky's indebtedness origination concern and its publication of existing loans separately arsenic good arsenic offers for a azygous deal, according to the radical familiar.

One bidder said the origination level is worthy astir $300 million, portion different said it was worthy person to $500 million.

If a woody closed astatine anyplace adjacent that valuation, it would correspond a steep discount to what Goldman paid for it, forcing the institution to disclose a writedown hitting its bottommost enactment successful an upcoming quarter.

While the all-stock acquisition was announced with a $2.24 cardinal valuation, it was worthy person to $1.7 cardinal by the clip the transaction closed six months later, according to a idiosyncratic with cognition of the matter.

Goldman President John Waldron acknowledged the imaginable for "some noise" to the bank's results arsenic a effect of the GreenSky sale. The transaction could hitch retired $500 cardinal successful goodwill tied to buying the lender, and the merchantability of loans could trigger different one-time accounting hits, helium told analysts astatine a June 1 conference.

The turbulence marks the latest fallout from Solomon's determination to exit astir of the bank's user efforts aft pushing hard for his imaginativeness to alteration Goldman into a fintech disruptor.

"We're pleased with the information by bidders," Goldman spokesperson Tony Fratto said successful a statement. "We're successful the mediate of the process and we'll larn much arsenic we spell forward."