Online lender SoFi to go public through merger with Palihapitiya-backed SPAC

By Joshua Franklin, Anirban Sen and Krystal Hu (Reuters) -U.S. online lending startup Social Finance Inc (SoFi) said on Thursday it has agreed to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank-check acquisition company led by venture capital investor Chamath Palihapitiya.

Reuters January 08, 2021 04:05:10 IST
Online lender SoFi to go public through merger with Palihapitiya-backed SPAC

Online lender SoFi to go public through merger with Palihapitiyabacked SPAC

By Joshua Franklin, Anirban Sen and Krystal Hu

(Reuters) -U.S. online lending startup Social Finance Inc (SoFi) said on Thursday it has agreed to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank-check acquisition company led by venture capital investor 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 had reported earlier on Thursday that SoFi and Social Capital were nearing a deal to merge. Shares of Social Capital closed up 58% at $19.17 apiece.

"Our goal is to build a one-stop financial platform and our diversified products can help us navigate both a high interest and low-interest environment," SoFi Chief Executive Anthony Noto told Reuters in an interview, adding the company has seen home loan refinancing business and investment products growing fast in the past year.

SoFi plans to use the proceeds to pay back debt from the $1.2 billion acquisition last year of payment software Galileo and to grow its business.

Founded in 2011, SoFi capitalized on the retrenchment of banks from large swaths of consumer lending in the aftermath of the 2008 financial crisis.

It started with refinancing student loans and expanded into mortgages and personal loans. The company said in October it had received preliminary approval from U.S. regulators for its application for a national bank charter. The company has also branched out into stock trading and cash management accounts.

Noto is a former Goldman Sachs Group Inc investment banker and Twitter Inc's ex-chief operating officer. He succeeded SoFi co-founder Mike Cagney, who stepped down in 2018.

SoFi said it expects to generate about $1 billion of adjusted net revenue in 2021, a 60% jump year-over-year.

Social Capital Hedosophia V is one of three so-called special purpose acquisition companies (SPACs) backed by U.S. investor Palihapitiya and London-based Ian Osborne that are currently looking for acquisitions.

SoFi had planned to go public through a traditional initial public offering (IPO) in 2021 after raising money in a private round but chose the SPAC route because it preferred the deal certainty and the ability to make projections in talks with investors, Noto said.

A SPAC is a shell company that raises money in an IPO to merge with a privately held company that then becomes publicly traded as a result.

They have emerged as a popular IPO alternative for companies, providing a path to going public with less regulatory scrutiny and more certainty over the valuation that will be attained and funds that will be raised.

Palihapitiya has been one of the most prolific sponsors of SPACs, merging them with a range of companies, from space tourism firm Virgin Galactic Holdings Inc to home-selling platform Opendoor Technologies Inc.

Social Capital Hedosophia V raised around $800 million in an IPO on the New York Stock Exchange in October.

(Reporting by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Editing by Matthew Lewis and Rosalba O'Brien)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Trump disavows any responsibility for his supporters' Jan. 6 attack
World

Trump disavows any responsibility for his supporters' Jan. 6 attack

By Steve Holland and Andrea Shalal JOINT BASE ANDREWS, Md./WASHINGTON (Reuters) - U.S. President Donald Trump, facing impeachment on a charge of "incitement of insurrection" on Tuesday disavowed responsibility for his supporters' violent invasion of the U.S. Capitol last week and said his remarks before the siege were appropriate.

Renault and Plug Power to develop fuel-cell commerical vehicles
News & Analysis

Renault and Plug Power to develop fuel-cell commerical vehicles

PARIS (Reuters) - French carmaker Renault and U.S. hydrogen specialist Plug Power have joined forces to develop hydrogen-powered light commercial vehicles, they said on Tuesday. The companies have signed a memorandum of understanding to launch a France-based 50-50 joint venture by the end of the first half of 2021, targeting more than 30% share of the fuel cell-powered light commercial vehicle market in Europe, their joint statement said

Analysis: Tesla's Model Y to emerge disruptor as China EV sales zoom in 2021
News & Analysis

Analysis: Tesla's Model Y to emerge disruptor as China EV sales zoom in 2021

By Yilei Sun and Brenda Goh BEIJING/SHANGHAI (Reuters) - New models will help electric vehicle sales in China zoom this year, after tepid business in a virus-riddled 2020, and analysts predict Tesla's Model Y pricing will emerge as a major disruptor in the world's biggest car market. Tesla Inc, which became the world's most valuable car maker last year, started selling locally made Model Y SUVs in China this month, for almost a tenth less than gasoline-powered luxury cars with similar market positioning. It set the starting price at 339,900 yuan ($52,376), or 10% below official prices of Daimler's Mercedes GLC, BMW's X3 and Audi's Q5L - all locally made gasoline sport utility vehicles (SUVs) with similar size and positioning.