Citigroup and Carlyle Group have forged a significant agreement to co-invest in early-stage fintech companies, specifically focusing on young lending platforms and the diverse financial assets they originate. This partnership aims to reshape how capital is raised within the rapidly evolving fintech sector. The financial assets in scope are broad, encompassing consumer loans, auto financing, and even renewable energy contracts like solar power agreements.

Under the terms of this new collaboration, Carlyle Group will concentrate its efforts on providing private credit solutions. Concurrently, Citi’s SPRINT venture team, already an established backer of innovative fintechs such as Pylon, is positioned to eventually facilitate the public securitization of these originated loans. This comprehensive strategy is designed to support promising fintech ventures throughout their entire growth trajectory, from initial seed funding through to large-scale operations, bridging both private and public capital markets.

This initiative is not Carlyle’s first foray into the fintech lending space; the firm previously acquired a minority stake in Sungage Financial, a residential solar lender, and also purchased a portion of its loan portfolio. Other major players, such as Blackstone, have also made similar strategic moves. However, the distinct advantage of this new partnership lies in its integrated structure: Carlyle gains privileged access to a flow of deals that might typically fall outside a traditional bank’s risk appetite, while Citi secures a robust partner capable of delving deeper into private lending opportunities.

According to Rajiv Amlani of Citi, the alliance will allow startups that lack sufficient credit history to be directed toward Carlyle, particularly those at the forefront of artificial intelligence and specialized finance. The stakes in this domain are substantial, with asset-backed finance representing a colossal $5.2 trillion market. Private credit managers are increasingly expanding their presence within this lucrative sector. This collaboration marks Citi’s third such strategic partnership within an 18-month period, following similar agreements with Apollo and LuminArx.

Akhil Bansal of Carlyle highlighted a key benefit for fintechs, stating that they often find it cumbersome to repeatedly introduce themselves when seeking capital. This partnership addresses that challenge by offering a singular, long-term capital partner capable of providing support from Series A funding rounds all the way through to Asset-Backed Securities (ABS). This integrated approach is being hailed as a 'full-stack strategy' engineered to empower the next generation of technology-enabled lenders.