Affirm's $750M Liberty Mutual Deal: A Boost for 2025 Lending Target

Affirm Holdings, Inc. (NASDAQ: AFRM), the innovative payment network, has received a significant boost in its capital base with a $750 million commitment from Liberty Mutual Investments (LMI). This strategic partnership, announced on January 24, 2025, will enable Affirm to expand its consumer-lending operations and work towards its ambitious 2025 lending target of over $34 billion.

The deal, which extends through June 2027, involves LMI purchasing Affirm's installment loans up to $750 million outstanding, with a total expected investment of up to $5 billion. This expansion of the forward flow loan purchase program reflects Affirm's robust growth strategy and commitment to long-term capital partnerships. The program provides an aligned funding partner that is committed to providing capital to increase access to Affirm's flexible payment options.



Brooke Major-Reid, Affirm's chief capital officer, highlighted the deepening relationship with Liberty Mutual, which began with a $250 million commitment before expanding to $500 million and now $750 million. This funding comes at a time of renewed investor enthusiasm for companies like Affirm, fueled by advancements in artificial intelligence and robust private-market investments.

Affirm's "buy-now-pay-later" model relies on external investors rather than deposits, distinguishing it from traditional banks. The company'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, Affirm 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.

The 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.

In conclusion, Affirm's $750 million commitment from Liberty Mutual Investments is a significant step towards achieving its 2025 lending target. This strategic partnership provides Affirm with the capital needed to expand its consumer-lending operations and solidifies its position in the competitive "buy-now-pay-later" market. As Affirm continues to innovate and adapt to the evolving financial landscape, investors can expect the company to maintain its momentum and deliver long-term value.