SoFi announces $8.65 billion IPO plan with SPAC Social Capital Hedosophia

by Candyd Mendoza11 Jan 2021

Online lender Social Finance (SoFi) has announced plans to go public through an $8.65 billion merger deal with Social Capital Hedosophia (SCH), a special purpose acquisition company (SPAC) headed by venture capital investor Chamath Palihapitiya.

The transaction values SoFi at approximately $6 billion and is expected to provide up to $2.4 billion in cash proceeds. Existing SoFi shareholders will roll 100% of their equity into the combined company, according to its Press release.

The San Francisco-based start-up’s goal is to create a “one-stop financial platform,” and SoFi Chief Executive Anthony Noto told Reuters that their diversified products could help them “navigate both a high interest and low-interest environment.” Noto also said that the company has seen rapid growth in its mortgage refinancing business and investment products in the past year.

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Once the deal is closed, SoFi will use the proceeds to further expand its business and pay back debt from its $1.2 billion acquisition of payment software Galileo.

The merger has already received unanimous approval from SCH board of directors and the independent directors of SoFi’s board of directors. It is expected to close in the first quarter of 2021.

“SoFi’s innovative, member-first platform has demystified financial services for millions of Americans and simplified the process for those looking to apply for loans, invest their money, obtain insurance and refinance their debt, among many other tasks that were previously arcane and needlessly complicated,” SCH founder and CEO Chamath Palihapitiya said. “Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability. We look forward to partnering with Anthony and his team as they help even more members to achieve financial independence.”