(Reuters) – US online lending startup Social Finance Inc (SoFi) said Thursday it agreed to go public through a merger with Social Capital Hedosophia Holdings Corp V, a venture capital investor-led blank acquisition firm Chamath Palihapitiya.
The deal values SoFi at around $ 8.65 billion and is expected to provide up to $ 2.4 billion in cash proceeds to the San Francisco-based company.
Reuters reported Thursday that SoFi and Social Capital were nearing a merger deal. Shares in the share capital closed up 58% at $ 19.17 each.
“Our goal is to build a one-stop financial platform and our diversified products can help us navigate in both a high-interest and low-interest environment,” SoFi CEO Anthony Noto told Reuters in an interview. adding that the company has seen the refinancing of home loan business and investment products grow rapidly over the past year.
SoFi plans to use the proceeds to pay off the debt from last year’s $ 1.2 billion acquisition of Galileo payment software and to grow its business.
Founded in 2011, 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 approval from US regulators for your application for a domestic bank card. The company has also branched out into stock trading and cash management accounts.
Noto is a former investment banker of Goldman Sachs Group Inc and Twitter Former chief operating officer of Inc. He succeeded SoFi co-founder Mike Cagney, who stepped down in 2018.
SoFi said it expects to generate about $ 1 billion in net adjusted revenue in 2021, a 60% year-over-year increase.
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.
SoFi had planned to go public through a traditional initial public offering (IPO) in 2021 after raising funds in a private round, but chose the SPAC route because it preferred the certainty of the deal and the ability to projection in investor talks. , Noto said.
A SPAC is a shell company that raises funds in an IPO to merge with a private company which 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.
Reportage by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Editing by Matthew Lewis and Rosalba O’Brien