TEL-AVIV-based Pagaya (NASDAQ:PGY) Technologies Ltd. (NASDAQ:PGY), a finance services company, has entered into a Warrant Agreement with an affiliate of Castlelake, a global alternative investment manager, according to a recent SEC filing. The agreement, dated September 13, 2024, is part of a forward flow arrangement to fund loans.
Under the terms of the Warrant Agreement, Pagaya will grant warrants to purchase its Class A Ordinary Shares as consideration for Castlelake's commitment to fund certain loan amounts monthly. The warrants represent up to 1.2275% of Pagaya's total outstanding shares, on a fully diluted basis, as of the agreement date. This percentage could increase to a maximum of 2.5% if Castlelake upsizes or extends its commitment.
The warrants, exercisable at $0.01 per share, are immediately exercisable and will expire ten years from the issuance date. The number of shares that can be acquired upon exercising the warrants is subject to adjustment in events like stock dividends, splits, combinations, reclassifications, and other corporate actions.
Pagaya's issuance of these warrants is exempt from registration under the Securities Act of 1933, as amended, relying on Section 4(a)(2) of the Act, which allows for issuances not involving a public offering.
The disclosure of this arrangement in the SEC filing provides transparency about Pagaya's unregistered sales of equity securities and its ongoing financial activities. This information is based on a press release statement and is intended to inform investors about recent developments within Pagaya Technologies Ltd.
In other recent news, Pagaya Technologies reported significant Q2 2024 earnings, with a network volume of $2.3 billion and a record $50 million in adjusted EBITDA. Despite a net loss of $75 million due to share-based compensation and fair value adjustments, the company raised its full-year outlook, indicating strong growth in fee revenue less production costs and four consecutive quarters of positive operating cash flow.
Furthermore, Pagaya Technologies signed a $1 billion forward flow agreement with Castlelake and achieved a AAA rating on its personal loan ABS program.
The company also announced an executive transition, with Scott Bower stepping down as the principal accounting officer. Nam Woo Kim, currently the Vice President of Accounting and Financial Reporting at Pagaya, will take over Bower's responsibilities on an interim basis. A search for a permanent successor is underway.
In addition, Pagaya Technologies appointed Rajinder Singh, a veteran in the banking and financial services industry, as its new Chief Risk Officer. Benchmark initiated coverage of Pagaya shares with a Buy rating, projecting that the company's potential to self-fund its growth may lead to GAAP net income profitability by 2025. These recent developments underscore Pagaya's continued strategic advancements and robust financial health.
InvestingPro Insights
As Pagaya Technologies Ltd. (NASDAQ:PGY) forges key financial agreements to expand its funding capabilities, insights from InvestingPro provide a broader context for investors. With four analysts recently revising their earnings projections upwards for the upcoming period, there's an optimistic sentiment around the company's financial future. This is particularly noteworthy as the company is expected to transition from a non-profitable status over the last twelve months to profitability this year, according to analyst predictions.
An examination of real-time data further informs our understanding of Pagaya's market position. The company's market capitalization stands at $901.28 million, reflecting its current valuation within the financial sector. Despite a negative P/E ratio of -6, indicating that the company has not generated net profits in the last year, the forward-looking PEG ratio of -0.17 suggests potential for future earnings growth.
Moreover, with a revenue increase of 18.78% over the last twelve months, Pagaya is showing a strong growth trajectory, which is supported by a significant gross profit margin of 40.16%.
Investors should note that Pagaya does not pay a dividend, which may be a factor for those seeking income-generating investments. For a more comprehensive analysis and additional InvestingPro Tips, interested parties can visit the dedicated page for Pagaya at https://www.investing.com/pro/PGY, where more than four additional tips are available.
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