Pagaya, a global financial technology company using artificial intelligence (AI) to reshape asset management, today announced its second $100 million asset-backed security (ABS) to be actively managed by AI, led by structuring agent Cantor Fitzgerald. This comes on the heels of Pagaya announcing the first-ever ABS fully managed by its AI in February 2019.
Pagaya has proven AI can scale within traditional finance, growing to $650 million assets under management since its founding in 2016, including a $100 million debt-financing deal with Citi Bank. The company is using AI to raise the standard return for low-risk investments, consistently out-performing incumbents.
“We’ve proven our AI can create huge opportunities for institutional investors and we’re excited to continue enabling its adoption,” said Ed Mallon, Chief Investment Officer at Pagaya. “What we’re doing in the ABS market is just the beginning.”
For this ABS, Pagaya’s AI will analyze millions of data points to select and purchase individual loans rather than package a pool of previously assembled assets based on one to two data points. Pagaya will provide active portfolio and risk management to the vehicle. The velocity of a second deal in a three-month-span proves that there is market receptivity to the unique structure and active management.
“Pagaya has created one of the most relevant applications of AI in the credit space which really stands out — we’ve seen strong demand over the past two deals,” said Marshall Insley, Co-Head of Structured Products at Cantor Fitzgerald. “It has been a pleasure to work with them on this transaction, and we look forward to more collaboration in the near future.”
Pagaya has a growing global investment team comprised of 40 high-caliber data scientists and AI experts, as well as ten finance specialists, including Mallon — a 20-year BlackRock veteran who joined Pagaya in 2018.