Best Egg’s $500Mn Debt Deal, Barclays To Take Over GM Card; Rerail’s $20Mn Angel Fund
Cole Gottlieb, Research Analyst
More consumers worry about missing debt payments. Mortgage rates tick up. Best Egg, Sofi, and Klarna announce financing deals. 20VC raises a third fund. Rerail announces $20Mn angel fund. Barclays and Goldman reach deal on GM co-brand card.
Best Egg secured funding from Fortress Investment Group affiliates last week. We proudly backed Best Egg's Flexible Rent program last December with a $150MM credit facility. Interested in learning more? Get in touch.
Keep an eye out – due to Cross River holiday closures, our next weekly newsletter will go out on Monday, October 28.
More Consumers Worry About Falling Behind On Bills
Consumers’ concerns that they may fall behind on debt payments reached the highest level since April 2020, a New York Fed survey shows. The data show that the expected likelihood of missing a minimum debt payment in the next three months rose to 14.2% in September, marking the fourth month in a row of increases. The metric is consistent with other data points that suggest some deterioration in household finances, as consumers continue to struggle with higher prices.
Meanwhile, mortgage rates ticked up 16bps, hitting their highest level since the beginning of August. The rate on a 30-year fixed mortgage hit 6.52% for the week ending October 11th, per data from the Mortgage Bankers Association. Higher rates have driven a slowdown in both home-purchase and refinance activity.
Best Egg Secures New $500Mn Debt Deal
Consumer lender Marlette Funding, better known as Best Egg, announced it has secured a $500Mn purchase facility managed by affiliates of Fortress Investment Group. The deal includes a forward-flow agreement for future loans originated by Best Egg and the purchase of a back-book of loans originated since Q4 2023. Since launching in 2014, Best Egg has originated more than $30Bn in personal loans, the company said. Best Egg CFO Andrew Deringer said of the news that it will enable the company to serve more borrowers who are looking to better manage their revolving debt.
20VC Raises $400Mn Fund For European Startups
20VC, the fund led by podcaster Harry Stebbings, announced a fresh $400Mn investing warchest that, Stebbings says, backing European startups in an effort to “make Europe great again.” About $275Mn will go towards Series A rounds vs. $125Mn into seed stage companies, Stebbings told TechCrunch. The majority of the LPs in the new fund are U.S.-based, and more than half the money in the fund is from institutional investors. 20VC has yet to begin deploying the new funds, as it still has untapped capital from a $140Mn fund raised in 2021.
Rerail Announces $20Mn Angel Fund
Rerail, a fintech-focused angel fund, has raised a $20Mn fund it plans to deploy as $200,000-$500,000 investments into pre-seed and seed-stage companies. Rerail is led by Anthony Danon, who has previously worked at Anthemis, Cocoa, and Speedinvest. Danon describes his thesis as fintech as a “horizontal,” rather than a vertical, with opportunities to leverage fintech to drive opportunities in everything from healthcare to logistics. Rerail will skew towards Europe, but is open to investing opportunities globally, Danon said.
Barclays To Take Over GM Co-Brand Card
Goldman Sachs slowly but surely is continuing the dismantling of its ill-fated consumer business. The bank reached a deal with Barclays to take over its General Motors co-brand credit card. By next summer, Barclays will become the exclusive issuer of two GM cards, a consumer loyalty card and a business card. The news comes about a month following reports that Goldman could see as much as $400Mn in losses tied to the sale of outstanding loans to GM cardholders, due to higher than expected credit losses. Of the news, GM CFO Paul Jacobson said, “We’re bringing thousands of new customers to our family of brands every year, especially as we grow in electric vehicles, and we look forward to creating new opportunities to reward our most loyal customers.”
SoFi Strikes $2Bn Loan Deal With Fortress
SoFi announced an agreement with Fortress Investment Group to expand its capabilities in its loan platform business, the companies announced. In that business line, SoFi refers pre-qualified borrowers that don’t meet its credit criteria to third-party originators, as well as originating loans on behalf of third parties. Fortress has committed up to $2Bn from money it manages to fund SoFi-originated personal loans. For SoFi, the agreement allows it to serve a broader credit spectrum and generate fee revenue in a less capital-intensive manner.
Klarna To Sell U.K. Loans To Hedge Fund
BNPL lender Klarna is selling its U.K. loan book to American hedge fund Elliott, the companies announced last week. The sale could free up as much as £30Bn (about USD $39Bn) that Klarna can redeploy to fund new loans, including in the U.S. market. The deal is expected to commence this month, with Elliott funding an SPV, which will make monthly purchases of loans that Klarna has originated. Klarna said the structure would allow it to manage its assets and balance sheet more efficiently, driving better returns for its investors.
New here? Subscribe to get the latest from Cross River. For even more updates, follow us on LinkedIn.
Disclaimers
All content is original and has been researched and produced by Cross River Bank (“Cross River”) unless otherwise stated herein. No part of this content may be reproduced in any form, or referred to in any other publication, without the express written consent of Cross River.
Cross River is not a broker-dealer or investment adviser and as such, this information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any investment in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. This content does not constitute an offer to sell or the solicitation of an offer to sell or buy any security in any jurisdiction where such an offer or solicitation would be illegal. There is not enough information contained in this content to make an investment decision and any information contained herein should not be used as a basis for this purpose.
This content does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of investors.
Investors are not to construe this content as legal, tax or investment advice, and should consult their own advisors concerning an investment in any instrument. The price and value of assets referred to in this content and the income from them may fluctuate. Past performance is not indicative of the future performance of any instruments referred to herein. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on Cross River’s views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. In addition to statements that are forward-looking by reason of context, the words “may, will, should, could, can, expects, plans, intends, anticipates, believes, estimates, predicts, potential, projected, or continue” and similar expressions identify forward-looking statements. Cross River assumes no obligation to update any forward-looking statements contained herein and you should not place undue reliance on such statements, which speak only as of the date hereof.
Although Cross River has taken reasonable care to ensure that the information contained herein is accurate, no representation or warranty (including liability towards third parties), expressed or implied, is made by Cross River as to its accuracy, reliability, or completeness. You should not make any investment decisions based on these estimates and forward-looking statements.
There is no guarantee that the market conditions during the past period will be present in the future. Rather, it is most likely that the future market conditions will differ significantly from those of this past period, which could have a materially adverse impact on future returns.
NO REPRESENTATION IS BEING MADE THAT ANY INVESTOR WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. We selected the timeframe for our analysis because we believe it broadly constitutes the most complete historical dataset for the industry or company that we have chosen to analyze.
