Online lender SoFi to come public through merger with Social Capital SPAC

Online lender SoFi to come public through merger with Social Capital SPAC

Financial services platform SoFi Inc. is planning to come public via a merger with a special-purpose acquisition company, or SPAC.

The pending merger with Social Capital Hedosophia Holdings Corp. V
announced Thursday, assigns a post-money equity value of $8.65 billion to SoFi, which is run by Anthony Noto. SPACs provide a non-traditional initial-public-offering route, allowing SoFi to come public through a merger with an already public company and thus bypassing the typical investor roadshow.

Shares of Social Capital Hedosophia Holdings V are up more than 60% in Thursday trading.

SoFi offers a variety of services for personal finance, lending and investing platforms. The company offers a membership that gives people access to career coaching, estate planning, and financial planning. SoFi generated over $200 million in total net revenue during the third quarter of 2020, according to the release announcing the merger.

The transaction with Social Capital is expected to deliver up to $2.4 billion in cash proceeds, including a $1.2 billion private investment in public equity (PIPE) led by Social Capital Chief Executive Chamath Palihapitiya. The deal has been approved by Social Capital’s board of directors and it’s expected to close hint he first quarter of 2021.

“SoFi’s innovative, member-first platform has demystified financial services for millions of Americans,” Palihapitiya said in the release.

Noto, who formerly served as chief operating officer at Twitter Inc. and a partner at Goldman Sachs Group Corp., will continue to lead SoFi after the transaction completes.

SPACs have been a hot trend lately, helping make 2020 the biggest IPO year for deal count and capital raises since the 1990s, according to data compiled by PricewaterhouseCoopers. There were 242 SPAC deals over the course of 2020.

The deal comes as the Renaissance IPO ETF

has gained 20% over the past three months and as the S&P 500

has risen 11%.

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