Investing.com -- According to a report from The Wall Street Journal, Affirm Holdings (NASDAQ:AFRM) has secured a $750 million funding commitment from Liberty Mutual’s asset-management unit, bolstering its consumer-lending operations.
The news pushed Affirm's stock around 4.8% higher premarket Friday.
The new financing is expected to help Affirm meet its 2025 lending target of over $34 billion, a 25% increase from the previous fiscal year.
Affirm’s “buy-now-pay-later” model relies on external investors rather than deposits, distinguishing it from traditional banks.
The Wall Street Journal said Liberty Mutual’s commitment to buy Affirm loans extends through June 2027 and builds on its previous investments in Affirm loans.
This latest deal follows Affirm's recent financing arrangements with private credit manager Sixth Street Partners, which pledged $4 billion, and Prudential Financial (NYSE:PRU), which committed $500 million.
Together, these partnerships demonstrate the growing role of private debt in funding nonbank lenders like Affirm.
Affirm’s lending model employs software algorithms to assess borrowers’ ability to repay loans, and unlike traditional credit card companies, it avoids charging late fees.
Over the years, it has shifted from issuing bonds to selling loans directly to private credit investors, a strategy increasingly popular among insurers and pensions seeking higher returns in illiquid markets.
Brooke Major-Reid, Affirm’s chief capital officer, is said to have highlighted the deepening relationship with Liberty Mutual, which began with a $250 million commitment before expanding to $500 million and now $750 million.
The funding comes at a time of renewed investor enthusiasm for companies like Affirm, fueled by advancements in artificial intelligence and robust private-market investments.