Information on the Target

Figure Technology Solutions ("Figure") is an innovative technology platform established in 2018, dedicated to enhancing the efficiency and transparency of financial services through blockchain technology. The platform operates Figure Connect, a dynamic marketplace that facilitates private credit loans and is recognized as the largest originator of Real World Assets globally. Figure’s offerings have allowed homeowners in 49 states and Washington, D.C. to receive home equity lines of credit (HELOCs) quickly, with approvals achieved in as little as five minutes and funding disbursed in as few as five days.

Figure's technology has been integrated into a wide-ranging network, comprising over 135 partners, including notable institutions such as Rate (formerly Guaranteed Rate), CrossCountry Mortgage, and Movement Mortgage. By leveraging its blockchain infrastructure powered by the Provenance Blockchain, Figure has optimized loan origination, facilitating a seamless experience for both loan originators and borrowers.

Industry Overview in the Target’s Specific Country

The financial services industry in the United States is undergoing significant transformation, driven by technological advancements and the growing preference for digitized offerings. The rapid adoption of blockchain technology has empowered financial platforms to enhance operational efficiency and provide greater transparency, ultimately benefiting consumers and service providers alike. This shift is particularly evident in the increasing utilization of marketplaces for private credit products, where borrowers can more easily access competitive loan options.

In the U.S., the private credit market has gained momentum over the past few years, drawing interest from both institutional and retail investors. With traditional banks tightening their lending criteria, alternative financing solutions are becoming increasingly vital for individuals seeking quick and flexible credit. The landscape continues to evolve, with innovative platforms like Figure leading the charge to streamline loan origination and expand access to capital.

Additionally, the introduction of blockchain in capital markets has opened new avenues for liquidity, allowing automated and transparent transactions that can lower costs for both lenders and borrowers. This trend is expected to grow, as firms leverage technology to unlock additional efficiencies, resulting in transformative impacts on traditional lending practices.

Overall, the private credit sector in the U.S. is steadily integrating digital innovations that enhance operations and user experiences. Companies such as Figure are at the forefront of these developments, aiming to reshape the future of lending through technology.

The Rationale Behind the Deal

The joint venture between Figure and Sixth Street reflects a strategic alignment aimed at catalyzing growth in the private credit market. Sixth Street’s commitment of $200 million in equity establishes a foundational partnership intended to bolster Figure's marketplace, Figure Connect. This investment is designed to be reused and recycled for future production, ultimately increasing liquidity for Figure’s private credit loans.

By combining Sixth Street’s expertise in asset-based finance with Figure's advanced marketplace capabilities, the deal aims to enhance the overall effectiveness of the lending ecosystem. This partnership not only enables streamlined processes but also strives to reduce borrowing costs, similar to the disruptive impact historically seen in agency mortgage borrowing.

Information about the Investor

Sixth Street is a prominent global investment firm boasting over $100 billion in assets under management and committed capital since its inception in 2009. With a workforce of more than 650 team members, including 280 investment professionals, Sixth Street is well-equipped to influence and nurture growth across various industries. The firm's commitment to flexible capital deployment and data-driven decision-making sets it apart as a leader in the investment landscape.

Sixth Street's focus extends beyond traditional market investments; it actively seeks innovative solutions to address evolving client needs. The firm's deep experience, particularly in residential mortgage investing, augments the partnership with Figure. By participating in this venture, Sixth Street reinforces its commitment to driving transformative advancements in financial technology.

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The joint venture between Figure and Sixth Street represents a significant advancement in the private credit sector. Leveraging Sixth Street's substantial capital and expertise, this partnership has the potential to redefine liquidity in the loan marketplace. Figure Connect's automated processes and transparent operation pave the way for a more accessible and efficient lending ecosystem, which can benefit a broad range of participants from both sides of the financial spectrum.

Moreover, the programmatic bidding system introduced in this joint venture's framework will likely enhance market competitiveness, further driving down costs for borrowers. The strategic initial focus on Figure HELOCs sets a pragmatic foundation for future expansions into other Non-Agency credit assets, positioning the venture for sustained growth and innovation.

Ultimately, with robust market research and technological integration, this partnership appears poised to facilitate transformational changes in the private credit landscape. While the investment climate is inherently risky, the expertise and resources brought to bear by both Figure and Sixth Street adapt favorably to current trends, making this venture a potentially sound investment.

In conclusion, the collaboration between Figure and Sixth Street is a timely response to the evolving financial services landscape. As the demand for innovative lending solutions continues to rise, this joint venture is likely to emerge as a frontrunner in promoting liquidity and efficiency within the private credit marketplace.

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