(Reuters) – US online loan startup Social Finance Inc (SoFi) said Thursday it has agreed to go public through a merger with Social Capital Hedosophia Holdings Corp V, an investor-led blank check construction company Chamath Palihapitiya venture capital.
The deal values SoFi at about $ 8.65 billion and is expected to bring up to $ 2.4 billion in cash flow to the San Francisco-based company.
Reuters had reported earlier on Thursday that SoFi and Capital Group were close to a merger. Shares of social capital closed at 58% at $ 19.17 per apiece.
“Our goal is to build a one-stop finance platform and our mixed results can help us navigate both a high-interest and low-interest environment,” SoFi CEO Anthony Noto told Reuters in an interview, adding that the company has seen home loan refinancing. business and investment returns grew rapidly in the past year.
SoFi plans to use the profits to repay debts from last year’s $ 1.2 billion purchase of Galileo’s payment software and to grow its business.
Founded in 2011, SoFi became a cashback from banks from large swords of consumer lenders following the 2008 financial crisis.
It started with refinancing student loans and expanded to mortgages and personal loans. The company said in October that it had received initial approval from U.S. regulators for its application for a national bank card. The company has also gone out to stock trading accounts and cash management.
Noto was an investment banker Goldman Sachs Group Inc and a former chief operating officer of Twitter Inc. It succeeded SoFi co-founder Mike Cagney, who retired in 2018.
SoFi said it expects to generate approximately $ 1 billion of adjusted net income in 2021, a 60% year-over-year jump.
Social Capital Hedosophia V is one of three special purpose construction companies (SPACs) backed by London-based US investor Palihapitiya and Ian Osborne who are currently looking to buy.
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 to verify the contract and the ability to forecast in talks with investors, Noto said.
SPAC is a shell company that raises money in an IPO to merge with a private company that then trades publicly as a result.
They have emerged as a popular IPO option for companies, giving way to going public with less regulatory scrutiny and more certainty about the valuation received and money raised.
Palihapitiya has become one of the most prolific sponsors of SPACs, uniting them with a range of companies, from space tourism company Virgin Galactic Holdings Inc to Opendoor Technologies Inc.’s home sales platform.
Calosoph Social Hedosophia V raised about $ 800 million in IPO on the New York stock exchange in October.
Reporting with Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Edited by Matthew Lewis and Rosalba O’Brien