Yesterday Bloomberg reported that blockchain startup Figure is working with Goldman Sachs, JP Morgan and Jeffries on a potential IPO of its lending arm in 2024. The same three institutions worked with Figure on its April asset backed security (ABS) issuance. Bloomberg reports it’s looking for a valuation of $2 – $3 billion. Separately Figure wants to raise $50 million for its digital assets arm.
Figure founded the public Provenance blockchain and has a wide range of institutional solutions. Its own blockchain based mortgage registry underpins the ABS issuance. A Figure subsidiary has an ATS license for trading funds, equity and other securities. Additionally, it’s working on tokenization solutions with asset manager Apollo Global in association with JP Morgan. Plus, it’s a technology provider for the USDF Consortium for tokenized deposits.
Figure’s lending arm
The lending arm referred to by Bloomberg is Figure’s retail real estate financing platform. Its biggest offering is Home Equity Lines of Credit (HELOC) where it has extended $8 billion in loans to date. Reading between the lines, Figure’s prime goal isn’t to run a retail lending business. It wants to be the infrastructure provider. However, first it needed to demonstrate the savings.
Mike Cagney, the SoFI founder who is Figure’s CEO often talks about why he started the lending arm – because banks were reluctant to use blockchain. “We would love to do this. We’d like to be the 10th bank to do a securitization on blockchain,” banks told Cagney. “There was no appetite for anyone to be an early mover,” added the Figure CEO. “So we ended up creating our own lending business to do this, and we’ve been able to manifest very significant savings.”
Hence, Cagney is considering an IPO and potentially appointing a different leader for the listed firm, because banks are now on board with blockchain.
Meanwhile, in July Bloomberg reported that Figure laid off 20% of its staff in preparation for the IPO. Figure had previously planned a SPAC to acquire a bank. It raised more than $400 million but abandoned the plan at the end of 2022 and refunded the money. In August this year it gave up plans to acquire a banking license given regulatory headwinds. Targeting asset management for digital assets is where it’s currently shining.