Affirm Holdings has announced a groundbreaking partnership with private credit firm Sixth Street, marking its largest capital commitment to date. This multibillion-dollar joint venture will see Sixth Street invest $4 billion in loans over three years, enabling Affirm to underwrite short-term installment loans ranging from four to six months. The innovative structure allows for the capital to be recycled; as loans are repaid, the funds will be reinvested to create additional loans, potentially extending over $20 billion during the partnership's duration. The collaboration reflects a growing trend where alternative asset managers are increasingly turning to fintech companies for investment opportunities. Unlike traditional banks, which primarily rely on deposits, Affirm utilizes various funding models, including warehouse facilities and asset-backed securitizations, to finance loans. This partnership not only highlights the evolving landscape of finance but also indicates that traditional banks still play a role in supporting these loan structures indirectly.
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