US-Israeli fintech Pagaya Technologies has agreed a deal to buy Theorem Technology, a Silicon Valley-based institutional asset manager powered by machine learning tech, for an undisclosed sum.
The deal will see Theorem’s institutional fund management business, consumer credit funds and engineering capabilities merge with Pagaya’s AI-powered consumer credit and residential real estate solutions.
Pagaya anticipates that the transaction will close in Q4 2024.
With the deal, the fintech states that its fund management business “is expected to grow to more than $3 billion of capital in investment vehicles separate from and incremental to the company’s market-leading securitisation program”.
It says this move aligns with its ambition to “diversify its funding sources and enhance its capital efficiency”.
Founded in 2014, Theorem specialises in post-trade data management for consumer credit, including the aggregation of transactional, position and balance data across counterparties.
The firm builds and utilises machine learning models to analyse and price loans and evaluate loan origination platforms to support its institutional fund investment strategies.
Pagaya CEO Gal Krubiner says the deal will provide Theorem with access to the Pagaya network’s “unique investment sourcing flow”, while in return, the fintech will be able to “fully take advantage of the impressive machine learning investment technology that underlies Theorem’s private credit investment platform”.
At present, Theorem manages over $1.7 billion for endowments, foundations, sovereign wealth funds, pensions, healthcare organisations, insurance companies and family offices worldwide.
Pagaya adds that investors in Theorem’s credit funds will now have access to “credit assets generated by Pagaya’s network of 30 of the top lenders in the US, including over $180 billion of application volume per quarter”.
The acquisition comes after Pagaya secured a BlackRock-led $280 million credit facility in February this year.
