(Reuters) – Online loan startup Social Finance Inc (SoFi) is approaching a deal to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank acquisition firm led by venture capital investor Chamath Palihapitiya, people familiar with the matter said Thursday.
The deal will value SoFi at over $ 6 billion and could be announced in the coming days, the sources said, warning that the talks could still fail and the terms could be changed.
The sources asked for anonymity because the negotiations are confidential. SoFi and Social Capital did not immediately respond to requests for comment.
Social Capital Hedosophia V is one of three so-called Special Purpose Acquisition Companies (SPACs) backed by US investor Palihapitiya and Ian Osborne, based in London, who are currently seeking acquisitions.
A SPAC is a shell company that raises funds in an initial public offering (IPO) to merge with a private company that is subsequently listed on the stock exchange.
They emerged as a popular IPO alternative for companies, providing a path to the public with less regulatory scrutiny and more certainty about the assessment that will be achieved and the funds that will be raised.
Palihapitiya was one of the most prolific sponsors of the SPACs, merging them with a number of companies, from space tourism company Virgin Galactic Holdings Inc to the Opendoor Technologies Inc.
Social Capital Hedosophia V raised approximately $ 800 million in an IPO on the New York Stock Exchange in October.
Founded in 2011, San Francisco-based SoFi capitalized on the downsizing of banks from large swathes of consumer loans in the aftermath of the 2008 financial crisis.
It started with the refinancing of student loans and expanded into mortgages and personal loans. The company said in October that it received preliminary and conditional approval from the US Office of the Currency Controller in its request for a national banking statute. The company has also branched out into stock trading and cash management accounts.
Reuters reported in December that SoFi had held discussions with SPAC about a merger.
Reportage by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Editing by Steve Orlofsky