Global alternative investment firm Castlelake has entered into a forward-flow agreement with lending platform Pagaya Technologies to purchase up to $500m (£380.3m) of auto loans.
According to Pagaya, the agreement will allow the firm to accelerate its auto lending platform, alongside its AAA-rated auto asset-backed securitisations program.
The agreement diversifies funding for Pagaya’s lending partners and expands its partnership with $22bn Castlelake after the alternatives firm purchased $2.5bn of the lending platform’s personal loans in July.
“We look forward to supporting Pagaya as they continue to grow their technology and data-driven program in the auto lending sector,” said John Lundquist, partner, specialty finance at Castlelake. “With the combination of increasing bank regulatory burdens and capital controls, continued underwriting discipline, consumer demand, and Pagaya’s robust network, we believe this forward flow agreement offers attractive risk-adjusted exposure for Castlelake’s investors.”
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Pagaya sources its loans through an artificial intelligence-backed credit decision-making platform. It has reached partnerships with 31 lending partners since its founding in 2016, including in personal loans, point of sale, and auto loans.
“This agreement is an important step in accelerating the growth of our auto business, providing stable and diversified funding for our lending partners, a critical element as the program matures and scales,” said Sanjiv Das, president and co-founder of Pagaya. “As we grow, we’ll continue to deepen institutional partnerships and execute a durable, diversified funding strategy.”
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