BNPL provider Affirm (NASDAQ: AFRM) has inked a deal with Sixth Street where the investment firm will commit $4 billion to loans originated by Affirm. This “long-term capital partnership” is expected to ramp up over three years.
Affirm says this is the largest capital commitment from outside money to date. Institutional money is an effective path for the Fintech to provide capital for credit issued on its platform, and private credit markets have been on the rise as investors chase yield.
The agreement may allow Affirm to extend up to more than $20 billion in loans over the next three years as the company continues to scale its payment network.
Brooke Major-Reid, Chief Capital Officer at Affirm, said the money is part of their plan to strengthen and diversify their funding sources.
“Sixth Street’s expertise in asset-based finance, long-term capital and collaborative approach make them an ideal partner for Affirm. Over the last several years, we have been extremely thoughtful in working with a diverse mix of world-class investors as we empower more consumers and merchants with our honest financial products.”
Partner and Head of Asset-Based Finance at Sixth Street Michael Dryden said Affirm’s ability to provide scalable credit solutions is unparalleled.
Affirm reports over 130 distinct investors from various institutions providing financing. As of September 30, 2024, its total funding capacity was $16.8 billion, which has grown by more than 50% over the last two years.
Following the news, shares of Affirm rose in early market trading.