Castlelake, a global alternative investment manager specializing in asset-based private credit investments, has reached an agreement to purchase up to $1.2 billion of consumer installment loans from Upstart, an artificial intelligence (AI) lending marketplace. The purchase agreement consists of a 12-month forward flow arrangement and follows a 2023 agreement with Upstart.

Upstart connects millions of consumers to more than 100 banks and credit unions that leverage Upstart's AI to approve more borrowers at lower rates, while delivering the exceptional digital-first experience customers demand. Castlelake's experience acquiring or financing more than 17 million consumer credit and small business loans informed its investment decision.

"Castlelake is pleased to reach an additional purchase agreement with Upstart and to continue supporting its mission to provide affordable credit," said John Lundquist, Partner, Specialty Finance at Castlelake. "We believe that the utility of credit is becoming even more valuable to consumers in the current economic environment, and that the asset class presents an attractive investment opportunity for investors seeking cash-flowing exposure."

"We're thrilled to keep building on the strong relationship that we've established with the experienced team at Castlelake," added Sanjay Datta, Chief Financial Officer of Upstart. "This extension will help ensure a resilient supply of capital to expand access to affordable credit."

The transaction is a recent example of Castlelake's participation in the consumer credit and specialty finance sector, where it has both acquired assets and provided asset-based private credit to consumer and small and medium-sized business originators since 2015. Other specialty finance transactions include a $200 million private structured financing solution for the origination of personal loan products, a £100 million facility commitment for a fintech company focused on expanding its revenue-based financing solution, and an agreement to provide credit to a tech-enabled specialty finance lender for small and medium-sized businesses.