Financial technology consumer lender Oportun Financial Corp. has agreed to sell $700 million in personal loans to private firms, Castlelake LP and Neuberger Berman Group LLC.
(Bloomberg) — Financial technology consumer lender Oportun Financial Corp. has agreed to sell $700 million in personal loans to private firms, Castlelake LP and Neuberger Berman Group LLC.
Castlelake will buy $400 million of loans from the fintech, according to a statement seen by Bloomberg, in a deal signed earlier this month. Neuberger agreed to purchase $300 million of loans in June, Jonathan Coblentz, CFO at Oportun said in an interview, adding that they expect to disclose the information to investors on its earnings call later on Tuesday.
The agreements are for loans that will be originated over the next 12 months, he said.
The deals come as direct lenders try to boost their presence in consumer loans — cutting into traditional lenders’ business — and taking advantage of the sometimes volatile market for asset-backed debt. Finance companies that originate consumer loans have been increasingly pitching the debt to private credit shops in recent months as regional banks pull back from the space.
Castlelake previously agreed to buy up to $4 billion of loans from fintech lender Upstart Holdings Inc., while KKR & Co agreed to buy as much as €40 billion ($43.8 billion) of buy-now-pay-later loan receivables from PayPal Holdings Inc.
“We have historically relied upon warehouse lines of credit, the asset backed securities market and selling wholesale loans for our funding,” said Coblentz in the interview. “We expect to continue selling loans into the market, we like the cost of capital and it’s a good source of liquidity,” he added, noting they expect to issue ABS bonds in the future as well.
Read more: Private Credit and Hedge Funds Flooded as Banks Dump Loans
Oportun has borrowed in the asset backed securities market before, by repackaging its loans into bonds of varying risk and size. The firm issued its latest ABS offering late last year, according to data compiled by Bloomberg, and has issued over 20 deals since 2015, the firm said.
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