Pagaya hit by Credit Suisse troubles

Israeli fintech company Pagaya Technologies (Nasdaq: PGY) has recently been coping with high demand for withdrawals from its Pagaya Opportunity Fund. As a result the company announced a change of policy last week in which investors seeking to redeem their investment will be unable to receive a full payment immediately but will receive quarterly payments.

Sources have informed “Globes” that the rise in withdrawals from the fund is due to the difficulties faced by Credit Suisse and fears that the Swiss bank would collapse. This led to a run on the bank until the Swiss government arranged for UBS to acquire Credit Suisse at the bargain price of $3.2 billion.

Credit Suisse is one of the clients of the Pagaya Opportunity Fund, investing in it on behalf of its own customers, and so Pagaya has been hit because of the vast withdrawals from the bank itself.

The Pagaya Opportunity Fund is a subsidiary of Pagaya, which provides technological solutions for financial institutions. The fund invests in P2P consumer credit in the US in accordance with an internal platform developed by Pagaya, which invests all its money in loans, receiving interest until the credit is repaid or sold off.

Pagaya says that the high demand for withdrawals from investors amounts to tens of millions of dollars above regular demand. The fund itself manages $1.3 billion and ended 2022 with returns of 4.09% net, after assets were revalued down by 2% in December 2022 due to the macroeconomic situation.

Pagaya is traded on Nasdaq at a market cap of $662 million after completing a SPAC merger last year at a valuation of $8.5 billion.

Pagaya was founded in 2016 by CEO Gal Krubiner, and his partners Yahav Yulzari, and Avital Pardo.

Published by Globes, Israel business news – en.globes.co.il – on April 16, 2023.

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