Key Takeaways
- • Figure Technology Solutions and Sixth Street formed a joint venture in which Sixth Street's Asset Based Finance platform committed $200 million of equity, a commitment that can be recycled for future Figure production.
- • The joint venture is designed to bring over $2 billion of liquidity to the non-agency mortgage market, starting with Figure HELOCs and later expanding to other non-agency credit assets.
- • The vehicle will act as an "always on," programmatic bid for Figure assets, securitizing loans, forward-selling bonds to investors, and buying loans from originators.
- • Over 40% of Figure's December 2024 volume went through Figure Connect, the blockchain-based private credit loan marketplace launched in June 2024.
- • Figure executives frame the venture as a step toward lowering borrowing costs, comparing its potential effect to the introduction of TBAs in the agency mortgage market.
Summary
Figure Technology Solutions ("Figure"), a blockchain-based technology platform for financial products, and Sixth Street, a global investment firm, announced the formation of a new joint venture vehicle. Sixth Street's Asset Based Finance platform has committed $200 million of equity to the vehicle. According to the companies, the commitment is unique because it can be recycled and used for future Figure production, which drives additional liquidity for Figure private credit loans.
The joint venture supports Figure Connect, Figure's marketplace for private credit loans. Figure Connect offers warehouse lines to manage cash flow, hedging to manage market risk, and infrastructure that automates loan sales and deliveries on the Provenance Blockchain. Partners can also use the marketplace for price discovery by putting pools of loans out for bidding. Figure said over 40% of its December 2024 volume ran through Figure Connect, which launched in June 2024 and is available to all participants in Figure's lending ecosystem.
The joint venture will operate as an "always on," programmatic bid for Figure assets. It is expected to securitize Figure loans, forward-sell the resulting bonds to investors, and buy loans from originators. It will begin with Figure HELOCs and plans to subsequently buy other non-agency credit assets. The companies describe the vehicle as bringing over $2 billion of liquidity and through-the-cycle stability to the non-agency mortgage market.
Todd Stevens, Chief Capital Officer of Figure, said the venture "validates Figure Connect as the largest, most liquid, blockchain-based capital market" and is intended to lower costs for lenders and borrowers, similar to the effect of TBAs in the agency mortgage space. Michael Dryden, Partner and Head of Asset Based Finance at Sixth Street, said the firm is bringing its experience in residential mortgage investing to the venture and believes Figure Connect can support the evolution of home equity and the broader private credit market.
Figure states that its subsidiary, Figure Lending LLC, is the largest non-bank provider of home equity lines of credit, with more than $13 billion of home equity originated on its software. Figure has embedded its HELOC in more than 135 partners, including Rate (formerly Guaranteed Rate), CrossCountry Mortgage, Movement Mortgage, and Goodleap. Sixth Street reports over $100 billion in assets under management and committed capital.
The joint venture supports Figure Connect, Figure's marketplace for private credit loans. Figure Connect offers warehouse lines to manage cash flow, hedging to manage market risk, and infrastructure that automates loan sales and deliveries on the Provenance Blockchain. Partners can also use the marketplace for price discovery by putting pools of loans out for bidding. Figure said over 40% of its December 2024 volume ran through Figure Connect, which launched in June 2024 and is available to all participants in Figure's lending ecosystem.
The joint venture will operate as an "always on," programmatic bid for Figure assets. It is expected to securitize Figure loans, forward-sell the resulting bonds to investors, and buy loans from originators. It will begin with Figure HELOCs and plans to subsequently buy other non-agency credit assets. The companies describe the vehicle as bringing over $2 billion of liquidity and through-the-cycle stability to the non-agency mortgage market.
Todd Stevens, Chief Capital Officer of Figure, said the venture "validates Figure Connect as the largest, most liquid, blockchain-based capital market" and is intended to lower costs for lenders and borrowers, similar to the effect of TBAs in the agency mortgage space. Michael Dryden, Partner and Head of Asset Based Finance at Sixth Street, said the firm is bringing its experience in residential mortgage investing to the venture and believes Figure Connect can support the evolution of home equity and the broader private credit market.
Figure states that its subsidiary, Figure Lending LLC, is the largest non-bank provider of home equity lines of credit, with more than $13 billion of home equity originated on its software. Figure has embedded its HELOC in more than 135 partners, including Rate (formerly Guaranteed Rate), CrossCountry Mortgage, Movement Mortgage, and Goodleap. Sixth Street reports over $100 billion in assets under management and committed capital.
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