Upstart Sells $2 Billion of Consumer Installment Loans to Blue Owl

FinTech lender Upstart Holdings has sold up to $2 billion of consumer installment loans to private credit lender Blue Owl Capital.

The deal includes $290 million of personal loans that have already been handed out, as well as debt that Blue Owl will buy over the next 18 months in a forward-flow agreement, buying the loans before they have been originated, Bloomberg reported Thursday (Oct. 10).

Reached by PYMNTS, Upstart confirmed the report and provided a statement from Upstart Chief Financial Officer Sanjay Datta.

“We’re thrilled to partner with the Blue Owl team in one of our largest purchase commitments ever,” Datta said. “Blue Owl’s ambitious vision and long-term focus will accelerate our efforts to expand access to affordable credit.”

This investment came at a time when Blue Owl is moving into additional credit products — the company completed its acquisition of Atalaya Capital Management in September — and when Upstart has pivoted to private credit, according to the Bloomberg report.

Upstart made earlier deals with Castlelake LP, Eltura Capital Management, Centerbridge Partners and Ares Management, per the report.

During an August earnings call, Upstart reported that it gained record highs in both contribution margin and positive cash flow, with the contribution margin reaching 67% in the second quarter.

Upstart CEO Dave Girouard attributed these gains to “our efforts over the past year to improve efficiency and operating leverage in our business.”

Girouard said during the call that Upstart reached a record percentage of automated loans, with 88% of unsecured loans being fully automated, meaning that the company can scale originations faster than headcount and provide customers with a faster, easier loan application process.

Meanwhile, when Blue Owl announced the completion of its acquisition of Atalaya, it said Atalaya focuses on asset-based credit investments across consumer and commercial finance, corporate and real estate assets and managed over $10 billion of assets under management, as of June 30.

“The completion of the acquisition of Atalaya’s business represents a significant expansion of Blue Owl’s alternative credit presence and supplements the firm’s marketing leading position in direct lending,” Blue Owl said in a Sept. 30 press release.