Sallie Mae, the leader in private student lending, has announced a multi-year strategic partnership with KKR, a leading global investment firm. Through this partnership, KKR expects to purchase an initial seed portfolio of private education loans followed by a minimum of $2 billion in newly originated private education loans annually, for an initial three-year term. Sallie Mae will maintain the relationships with customers and retain servicing for loans sold to KKR and will earn ongoing fees from KKR for providing servicing, program management, and industry expertise.
This strategic partnership is expected to strengthen Sallie Mae’s loan originations capacity and ability to serve students and families by expanding access to innovative, scalable, and capital-efficient funding. Sallie Mae anticipates this partnership will unlock the potential for off-balance sheet capital efficiency, create a more resilient, capital-light, and consistent earnings profile, and allow the company to serve more students and families.
"We believe this inaugural partnership with KKR will unlock the potential for off-balance sheet capital efficiency, create a more resilient, capital-light, and consistent earnings profile, and allow us to serve more students and families," said Jon Witter, CEO of Sallie Mae.
“We're pleased to partner with Sallie Mae, a market leader with a strong track record of disciplined underwriting and servicing performance, as it expands its ability to serve students and optimize its balance sheet,” said Avi Korn, managing director and co-head of asset-based finance at KKR.
Morgan Stanley & Co. LLC served as the sole structuring advisor to Sallie Mae. As a result of these announcements, the company's shares have moved 4.74% on the market, and are now trading at a price of $28.05. For more information, read the company's full 8-K submission here.
