{"id":107746,"date":"2021-01-07T22:34:44","date_gmt":"2021-01-07T22:34:44","guid":{"rendered":"https:\/\/precoinnews.com\/?p=107746"},"modified":"2021-01-07T22:34:44","modified_gmt":"2021-01-07T22:34:44","slug":"online-lender-sofi-to-go-public-through-merger-with-palihapitiya-backed-spac","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/online-lender-sofi-to-go-public-through-merger-with-palihapitiya-backed-spac\/","title":{"rendered":"Online lender SoFi to go public through merger with Palihapitiya-backed SPAC"},"content":{"rendered":"
(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.<\/p> 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.<\/p>\n 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.<\/p>\n \u201cOur 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,\u201d 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.<\/p>\n 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.<\/p>\n Founded in 2011, SoFi capitalized on the retrenchment of banks from large swaths of consumer lending in the aftermath of the 2008 financial crisis.<\/p>\n 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.<\/p>\n Noto is a former Goldman Sachs Group Inc investment banker and Twitter Inc\u2019s ex-chief operating officer. He succeeded SoFi co-founder Mike Cagney, who stepped down in 2018.<\/p>\n SoFi said it expects to generate about $1 billion of adjusted net revenue in 2021, a 60% jump year-over-year.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n Social Capital Hedosophia V raised around $800 million in an IPO on the New York Stock Exchange in October.<\/p>\n