Affirm’s Lending Capacity Gets Boost From Sixth Street Investment

Payment network Affirm and global investment firm Sixth Street have formed a long-term capital partnership in which Sixth Street will invest up to $4 billion by purchasing Affirm loans in a three-year forward flow agreement.

This capital commitment will enable Affirm to extend up to $20 billion in loans over the next three years, the companies said in a Friday (Dec. 13) press release.

The partnership provides capital efficient funding to support the company’s growth plans, Affirm Chief Capital Officer Brooke Major-Reid said in the release.

“Sixth Street’s expertise in asset-based finance, long-term capital and collaborative approach make them an ideal partner for Affirm,” Major-Reid said. “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.”

Sixth Street plans to continue building on this relationship and supporting Affirm’s growth in the years to come, Michael Dryden, partner and head of asset based finance at Sixth Street, said in the release.

“Affirm’s ability to provide flexible, scalable financing solutions is unparalleled, and we see tremendous opportunity in this partnership,” Dryden said.

As of Sept. 30, Affirm’s total funding capacity was $16.8 billion — having grown more than 50% over the past two years — and the company generated over $28 billion in gross merchandise volume over the prior 12 months, per the release.

Affirm said in November that it claims a third of the volume and more than half of the revenue in the U.S. pay later space.

The company has a “huge competitive moat” because of the difficulty of underwriting, Affirm CEO Max Levchin said Nov. 7 during the company’s quarterly earnings call.

“You have to have massive infrastructure to mine the data that you get,” Levchin said. “It’s not enough to have and store the data. You actually have to know what to do with it.”

On Dec. 3, Affirm said it partnered with eight more merchants to help their shoppers use flexible pay-over-time options.

Consumers in the United States can now select Affirm as a payment option at checkout at Agape Diamonds, Discount Tire, Ever/body, FullBeauty, Garmin, Hotels.com, Living Spaces and Sweetwater.