Anthony Noto, Sophie’s CEO
Adam Jeffery | Cnbc
Online capital lending startup Social Finance (Sophie) is making a public deal to go public through a merger with Social Capital Hisography Holdings Corp V, a free-to-take acquisition company led by venture capital investor Chamath Palihipitiya Has been done, people familiar with the matter said on Thursday.
Sources said the deal would value Sophie more than $ 6 billion and could be announced in the coming days, with sources warning that talks could still collapse and terms could be changed.
Sources requested anonymity as the talks are confidential. SoFi and Social Capital did not immediately respond to requests for comment.
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.
SPAAC is a shell company that raises money in an initial public offering (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 has been one of SPAC’s most prolific sponsors, merging them with several companies ranging from space tourism firm Virgin Galactic to home-selling platform Opendoor.
In October, social capital Hadosofia V raised nearly $ 800 million in an IPO on the New York Stock Exchange.
Founded in 2011, San Francisco-based Sophie prohibited retrenchment of banks from large-scale consumer lending in the aftermath of 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, conditional approval from the US Comptroller’s Office of Currency in its application for a national bank charter. The company has also made a dent in share trading and cash management accounts.
Reuters reported in December that Sophie had discussed with SPAC about the merger.