Amazon, PayPal to head to Vegas ABS bash
Tech giants Amazon and PayPal are again set to attend the SFIG IMN securitization industry gathering in Las Vegas next month, with both firms expanding their small business lending efforts and eyeing capital markets financing.
According to the delegate list for the event, both companies are sending capital markets representatives to the SFIG Vegas conference, which takes place at the Aria Resort & Casino on February 25-28.
PayPal will be represented by Peter Ostrem, the head of capital markets at Swift Capital, the online small business lender which was acquired by PayPal in August last year. He was previously a senior managing director at Capmark Investments and a managing director at Goldman Sachs.
The delegation from Amazon includes its assistant treasurer, Tony Masone, and Nick Clemente, head of capital markets at the small business lending division, Amazon Lending. Clemente was previously a director in credit structuring at BNP Paribas in New York, according to his LinkedIn profile, where he was responsible for the origination of structured credit derivatives and funding transactions, including CLO warehouse financing.
Amazon has already tapped the securitization markets as part of a plan to shift the risk of its business lending programme off its balance sheet.
In October 2016 the firm signed a $500m revolving credit facility secured on loans to sellers in its marketplace. In the company’s latest quarterly results, it said the facility had been increased to $600m, and as of September 30, 2017, the firm had drawn $550m — pledging $639m of cash and loan receivables as collateral. The company said the weighted average interest rate on the facility at that point was 2.6%. It carries interest at 1.65% over Libor, plus a commitment fee of 50bp on the undrawn portion.
Amazon has stated in previous quarterly reports that it intends to transfer more of the risk of its seller financing programme to third parties.
Similarly, PayPal has expressed interest in funding its credit portfolio through third parties, including bank lending, securitization, private equity and sovereign wealth funds, although the company told GlobalCapital in August that this was unlikely to be a near-term project.
As well as its business lending operations with Swift Capital, in November PayPal said it had sold $6.8bn of its consumer credit receivables to Synchrony Financial. This included $5.8bn of receivables, as at October 31 last year, as well as approximately $1bn of participation interests in receivables held by “certain investors and a chartered financial institution”. The transaction is expected to close in the third quarter of 2018.
Also in attendance at the SFIG event this year will be representatives from Upgrade, an online consumer lender founded by former Lending Club CEO Renaud Laplanche, who left the company in May after an internal review revealed a host of control issues at the lender.