Affirm Holdings, a financial technology company specializing in “buy now, pay later” (BNPL) solutions, has announced a significant expansion of its partnership with Liberty Mutual Investments (LMI). This development is set to deepen the collaboration between the two firms, focusing on increasing consumer accessibility to Affirm’s payment offerings. The move underscores Affirm’s strategy of securing diverse funding sources to sustain its financial services. The partnership’s progression reflects an alignment of interests in a growing market segment where flexible consumer credit is in high demand.
What does the expanded partnership include?
Under the enhanced agreement, LMI has committed to purchasing Affirm’s installment loans on a forward flow basis through June 2027. The program allows LMI to acquire loans up to a $750 million limit at any given time. Over the longer term, LMI expects to invest up to $5 billion into the program, strengthening its foothold in the alternative credit space. Affirm, in turn, benefits from sustained access to capital, which it has identified as a crucial element of its mission to provide transparent and consumer-friendly financial products.
How will this impact Affirm’s financial capacity?
The expanded partnership bolsters Affirm’s funding model, which has already shown significant growth. Over the last two years, the company has increased its total funding capacity by over 50%, reaching $16.8 billion by the end of September 2023. This additional capital infusion further reinforces Affirm’s ability to scale its loan offerings while maintaining a diversified investor base comprising more than 130 entities.
Similar initiatives have been undertaken by Affirm with other capital partners. For example, in December 2023, Affirm partnered with investment firm Sixth Street, which committed up to $4 billion over three years through a forward flow loan agreement. The Sixth Street partnership is expected to enable Affirm to extend $20 billion in loans during that period, demonstrating the company’s ongoing emphasis on forging robust capital-backed collaborations.
Affirm’s Chief Capital Officer Brooke Major-Reid highlighted the importance of this partnership in fulfilling the company’s mission, stating:
“Affirm’s mission to deliver honest financial products that improve lives is premised on driving positive credit outcomes, having access to deep and diverse pools of committed capital, and leveraging the power of partnerships across our network.”
John Kim, managing director at Liberty Mutual Investments, also emphasized LMI’s commitment to supporting Affirm’s long-term growth, commenting:
“Liberty Mutual Investments’ ability to invest across the capital structure with a single-client focus allows us to flexibly provide solutions and scale to our long-term partners, like Affirm.”
Affirm has historically positioned itself as a dominant player in the U.S. BNPL space, with the company claiming ownership of one-third of the volume and over half of the revenue in this sector. This dominance has been supported by partnerships and investments like the one with LMI, which enable Affirm to maintain a competitive edge and meet the increasing consumer demand for flexible payment solutions.
The collaboration between Affirm and Liberty Mutual highlights a growing trend in the BNPL market where financial technology firms rely on institutional partnerships to scale operations. As demand for flexible credit solutions continues to rise, partnerships like these offer a blueprint for sustainable growth. For consumers, this means greater access to installment-based payment plans, further embedding such offerings into everyday purchasing decisions. However, as the BNPL landscape becomes more competitive, sustaining a diverse funding base will likely remain a critical factor for Affirm’s long-term success.
