Pagaya Technologies is exploring an acquisition of Sunlight Financial Holdings, which helps homeowners finance rooftop solar panels, people with knowledge of the matter said.
The Tel Aviv-based financial technology company has expressed interest in Sunlight, according to the people, who asked not to be identified discussing confidential information.
Shares of Sunlight soared as much as 122%. They were up 81% to 59 cents each at 1:33 p.m. in New York trading Thursday, giving the company a market value of $79 million. Pagaya's shares were up 4.2% to 95 cents, giving it a market value of $672 million.
It's unclear how Sunlight will respond and there's no certainty a deal will be reached, some of the people said.
Pagaya "continues to explore opportunities that are accretive" to its business, a spokesperson for the company said. A representative for Sunlight didn't respond to requests for comment.
Both Pagaya, whose technology is used to originate consumer loans, and Sunlight went public via mergers with blank-check companies. They did so at the height of the boom for special purpose acquisition companies, or SPACs, and have seen their share prices plummet.
Sunlight, whose stock has fallen more than 90% since its listing, said last year that its board had begun exploring strategic alternatives because it didn't believe its share price reflected the company's intrinsic value. Rising interest rates have made it more expensive for specialized financiers like Sunlight to secure capital.
Complicating matters, Sunlight's primary lender was Silicon Valley Bank, which collapsed in March. Sunlight said this month it signed an $89 million loan pact with Cross River Bank to strengthen its balance sheet and bolster liquidity.
The company, which has operations in New York and Charlotte, North Carolina, is one of the largest U.S. residential-solar finance companies. It also provides loans for roofs, windows and other home-improvement projects.
Founded in 2016, Pagaya uses artificial intelligence to assess consumer credit risk and predict behavior it says can help more people get access to loans. Lenders such as SoFi, Klarna and Ally use its technology to extend personal loans, auto loans, home loans, credit cards and "buy now, pay later" loans.
Pagaya said Thursday it had raised $75 million from existing investor Oak HC/FT through a convertible perpetual preferred security. It plans to use the money to help fund mergers and acquisitions, according to a statement.
