Pagaya set to acquire Silicon Valley’s Theorem Technology for an undisclosed sum

Here are the key points regarding Pagaya Technologies’ acquisition of Theorem Technology:

1. Acquisition Overview:
   • US-Israeli fintech Pagaya Technologies has agreed to acquire Theorem Technology, a Silicon Valley-based institutional asset manager specializing in machine learning for an undisclosed amount.
   • The deal is expected to close in Q4 2024.
2. Business Integration:
   • Theorem’s institutional fund management, consumer credit funds, and engineering capabilities will merge with Pagaya’s AI-powered consumer credit and residential real estate solutions.
3. Growth and Expansion:
   • Pagaya anticipates that its fund management business will grow to over $3 billion in investment vehicles, separate from its existing securitization program.
   • This acquisition aligns with Pagaya’s strategy to diversify its funding sources and enhance capital efficiency.
4. Theorem Technology’s Expertise:
   • Founded in 2014, Theorem specializes in post-trade data management for consumer credit and utilizes machine learning to analyze and price loans.
   • The firm manages over $1.7 billion for global institutional investors, including endowments, sovereign wealth funds, pensions, and insurance companies.
5. Strategic Benefits:
   • The acquisition will provide Theorem with access to Pagaya’s extensive investment sourcing network, while Pagaya will benefit from Theorem’s machine learning investment technology.
   • Investors in Theorem’s credit funds will gain access to credit assets from Pagaya’s network of top US lenders, with over $180 billion in application volume per quarter.
6. Recent Pagaya Developments:
   • The acquisition follows Pagaya securing a $280 million credit facility led by BlackRock earlier this year.