Yahoo Finance Carlyle to Buy Sungage Residential Solar Loans as Banks Retreat
(Bloomberg) -- Carlyle Group Inc. has agreed to buy about $450 million of loans made to consumers adding solar cells to their homes from financing company Sungage Financial as regional banks and traditional buyers pull back from purchases, according to a statement seen by Bloomberg.
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The investment firm will buy the loans Sungage makes over the next 12 to 18 months under a so-called forward flow agreement, as the solar company seeks to diversify its funding sources. Carlyle is also acquiring a minority stake in the company as part of the transaction, Akhil Bansal, head of credit strategic solutions at Carlyle, said in an interview.
Consumer lenders, such as personal loan providers, auto dealers or solar companies, have faced a pullback from regional banks and credit unions that used to be among the largest buyers of their debt. That’s given private credit lenders an opening to grow their footprint in the estimated $5.5 trillion asset-based finance market.
“Specialty finance companies historically sold their loans to community or regional banks but over the past 24 months the bid for that debt has evaporated,” Bansal said. “That’s leaving these originators in a very tough spot, so private markets are stepping in.”
Carlyle had purchased more than $400 million of a private student loan portfolio earlier this year from Truist Bank.
The push from private credit lenders accelerated last year following Silicon Valley Bank’s collapse in March. Regional banks and financial institutions broadly rushed to sell bundles of loans to alternative asset managers to shore up capital, while they cut back dramatically on their purchases of debt from non-bank lenders.
Founded in 2011, Sungage offers online financing with the monthly payments available for solar, roof, and battery loans, the statement said.
The loans Carlyle is set to buy from Sungage are given to prime consumers, Bansal said. He added that the firm is targeting consumers who are homeowners and are better placed to weather inflation and the higher-for-longer rate environment which is pushing US borrowers to take on more debt.
“Our partnership with Carlyle is a huge win in so many ways,” said Sungage Financial CEO Michael Gilroy in the statement. “It gives Sungage line of sight to tremendous capacity and accelerates our ability to scale.”
Other recent asset-backed investments from Carlyle include a $100 million credit facility with DecisionRx Inc. earlier this year, and a $150 million flow agreement focused on super-prime and prime retail loans with ECN Capital’s manufactured housing business. Carlyle’s Credit Strategic Solutions team — which has about $7 billion in assets under management — led the current transaction, the statement said.
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