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Private equity firm Sixth Street has made a significant investment in blockchain-based lending platform Figure Technology Solutions, injecting $200 million into the company. This strategic move is expected to bolster Figure Connect, the platform’s private credit lending division, by enhancing its loan origination capabilities.
Joint Venture and Investment Details
Figure and Sixth Street announced the investment on February 27, marking the beginning of a joint venture between the two firms. As part of the agreement, Sixth Street’s Asset-Based Finance division will invest $200 million in equity into Figure. This funding is anticipated to have a profound impact on the non-agency mortgage market, injecting over $2 billion of liquidity through Figure.
Impact on Figure and the Market
According to Todd Stevens, chief capital officer at Figure, “This joint venture between Figure and Sixth Street puts Figure Connect on a trajectory that is ultimately intended to lower costs for lenders and borrowers, similar to how borrowing costs were lowered with the introduction of TBAs in the agency mortgage space. It validates Figure Connect as the largest, most liquid, blockchain-based capital market.”
The investment will enable Figure Technology to scale its operations, leveraging the joint venture to access additional liquidity and gain an “always-on” programmatic bid for its assets. Figure’s loans will be set for securitization through this collaboration, providing liquidity to its users.
The Role of Blockchain Technology
Launched in June 2024, the Figure Connect platform utilizes blockchain technology to offer benefits such as market risk hedging and sales automation. The Figure Connect network operates on the Provenance Blockchain, which Figure uses to onboard all loans. As a leading originator of real-world assets, the Provenance Blockchain enables Figure’s partners to access price discovery through on-chain loan pool bidding.
In December 2023, over 40% of Figure’s transaction volume occurred on the blockchain, demonstrating the growing importance of this technology in the lending space. With this investment, Figure is poised to further capitalize on the benefits of blockchain, driving growth and innovation in the industry.
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