(Reuters) – America’s online lending startup Social Finance Inc (Sophie) said on Thursday that it has agreed to go public through a merger with Social Capital Hisography Holdings Corp V, a vacancy. -Check is a takeover company led by venture capital investor Chamath Palipitishia.
The deal values Sophie for about $ 8.65 billion and is expected to provide up to $ 2.4 billion in cash income to the San Francisco-based company.
Reuters reported earlier on Thursday that Sophie and Social Capital are in a deal for a merger. Shares of Social Capital gained 58% to close at $ 19.17.
Sophie chief executive Anthony Noto told Reuters in an interview that the company had looked at home loan refinancing. Trade and investment products have been growing rapidly in the last one year.
SoFi plans to use the proceeds from last year’s $ 1.2 billion acquisition of payment software Galileo to pay off debt and grow its business.
Founded in 2011, SoFi prohibited retrenchment of banks from large-scale consumer lending after the 2008 financial crisis.
It began with refinancing student loans and expanded into mortgages and personal loans. The company said in October it received initial approval from US regulators to apply for a national bank charter. The company has also made a dent in share trading and cash management accounts.
Noto is a former Goldman Sachs Group Inc. investment banker and former chief operating officer of Twitter Inc. He succeeded SoFi co-founder Mike Cagney, who stepped into 2018.
SoFi said it expects to generate $ 1 billion of adjusted net revenue in a year with a 60% jump in 2021.
Social capital Hedosopia V is one of three so-called special purpose acquisition companies (SPACs), backed by US investors Palihapitia and London-based Ian Osborne who are currently looking for acquisitions.
Sophie had planned to go public through a traditional Initial Public Offering (IPO) after raising money in a private round in 2021, but chose the SPAC route as the deal was to create certainty and speculation in negotiations with investors Likes the ability, Noto said.
An SPAC is a shell company that raises money in an IPO to merge with a privately held company and then publicly traded as a result.
They have emerged as a popular IPO option for companies, providing a way for the public with less regulatory scrutiny and greater certainty on the price to be received and the funds that will be raised.
Palihappia is one of SPAC’s most cheerful sponsors, ranging from spacecraft firm Virgin Galactic Holdings Inc. to home-selling platform Opendur Technologies Inc., mixing them with several companies.
In October, social capital Hadosofia V raised nearly $ 800 million in an IPO on the New York Stock Exchange.
Reporting by Joshua Franklin in Miami, Anirban Sen in Bangalore and Crystal Hu in New York; Editing by Matthew Lewis and Rosalba O’Brien