SoFi to go public through merger with Palihapitiya-backed SPAC
07/01/2021 17:36
(Recasts with official confirmation, adds comments by SoFi CEO,
other details)
By Joshua Franklin, Anirban Sen and Krystal Hu
Jan 7 (Reuters) - 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 IPOE.N ,
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 San
Francisco-based SoFi.
Reuters had reported earlier on Thursday that SoFi and
Social Capital were nearing a deal to merge. Units of Social
Capital Hedosophia Holdings Corp V had jumped as much as 47.9%
following the report and were trading up 29.7% at $15.72 before
the stock was halted. urn:newsml:reuters.com:*:nL8N2JH4XB
"The new investments and our partnership with Social Capital
Hedosophia signify the confidence in our strategy, the momentum
in our business, as well as the significant growth opportunity
ahead of us," SoFi Chief Executive Anthony Noto said in a
statement.
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, conditional approval from the U.S. Office
of the Comptroller of the Currency in its application for a
national bank charter. The company has also branched out into
stock trading and cash management accounts.
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.
"We look forward to partnering with Anthony and his team as
they help even more members to achieve financial independence,"
Palihapitiya said.
A SPAC is a shell company that raises money in an initial
public offering (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 SPCE.N to
home-selling platform Opendoor Technologies Inc OPEN.O .
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 Steve Orlofsky
and Matthew Lewis)
((joshua.franklin@thomsonreuters.com; +1 646-223-6356; Reuters
Messaging: joshua.franklin.thomsonreuters.com@reuters.net))