Social Finance Inc., the online lender known as SoFi that gained popularity by refinancing student loans, agreed to go public by merging with a special purpose acquisition company in a transaction that values the upstart at around $8.7 billion.
The deal between the San Francisco-based lender and Social Capital Hedosophia Holdings Corp. V, a blank-check company founded by former Facebook executive Chamath Palihapitiya, marks the latest example of a growing trend in which closely held firms go public by merging with a SPAC.
SoFi, which weathered a workplace sexual-harassment
SoFi then sought to capitalize on its customer base of young, highly paid white-collar professionals — the company calls them “members” — by offering them other financial products.
“SoFi’s innovative, member-first platform has demystified financial services for millions of Americans,” Palihapitiya said Thursday in a statement. “Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability.”
SoFi is set to generate about $1 billion of adjusted net revenue in 2021, the company said, without providing specifics.
SPACs raised a record
Some 1.8 million people have used a SoFi service, the company said. In October, SoFi received preliminary approval from the Office of the Comptroller of the Currency for a national bank charter, a move that if finalized would reduce its cost of funds.
The transaction is expected to provide as much as $2.4 billion in cash proceeds, which includes $1.2 billion through a private investment in public equity, or PIPE. Investors include funds managed by BlackRock, T. Rowe Price Associates, Coatue Management and Healthcare of Ontario Pension Plan.