Pagaya Reveals Second-Ever $100 Million ABS Fully-Managed By AI

Pagaya, a world class financial technology company that uses artificial intelligence (AI) to reshape asset management, today revealed its second $100 million asset-backed security (ABS) to be actively taken care of by Artificial Intelligence, led by structuring agent Cantor Fitzgerald. This news arrives right on the heels of Pagaya revealing the first-ever ABS fully taken care of by its AI in February 2019.

Pagaya has proved the fact that AI can scale within traditional finance, amassing up to $650 million assets under management from its conception in the year 2016, including a $100 million debt-financing deal with Citi Bank. The company is making use of AI to increase the standard return for low-risk investments, out-performing incumbents on a steady.

Ed Mallon, Chief Investment Officer at Pagaya talked on how they have proven that their AI can make great opportunities for institutional investors and how excited they are to keep enabling the adoption of AI. Ed also included that what they are doing in the ABS market is just the beginning.

For this ABS, Pagaya’s AI will run through millions of data points to choose and buy individual loans instead of packaging a pool of formerly assembled assets on the basis of one to two data points. Pagaya will supply active portfolio and risk management to the vehicle. The speed of the second deal in the span of three months confirms that there is market receptivity to the special structure as well as the active management.

Marshall Insley, Co-Head of Structured Products at Cantor Fitzgerald said that Pagaya has built one of the most relevant applications of AI in the credit space which really stands out and also testified to how they have seen a strong demand over the past two deals. Insley said it’s been a pleasure to work with them on this transaction, and they look forward to more collaborations in the near future.