Online personal-finance company SoFi is going public in a $8.65 billion deal with Social Capital Hedosophia Holdings V, the latest blank-check company from venture capitalist Chamath Palihapitiya.
Existing SoFi shareholders will roll 100% of their equity into the combined company. Shares of Social Capital Hedosophia V (ticker: IPOE) surged 58% Thursday after the deal was announced, up $7.02 to $19.14.
The deal for SoFi, one of the most well-known fintechs, is expected to close in the first quarter and calls for the combined company to receive $2.4 billion of gross proceeds. This includes $805 million of cash held in Social Capital Hedosophia V’s trust account from its October IPO.
Palihapitiya, founder and CEO of Social Capital Hedosophia V, is leading a $1.2 billion private investment in public equity, or PIPE, that includes $950 million in investments from BlackRock (BLK), Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners, and Healthcare of Ontario Pension Plan. Palihapitiya, along with Hedosophia, a London venture capital firm led by Ian Osborne, are also contributing $275 million, a statement said.
“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,” Palihapitiya said in a statement.
Founded in 2011, SoFi is known for its student-lending platform. The San Francisco fintech, known formally as Social Finance, last raised $500 million in 2019 in a series H investment round led by Qatar Investment Authority. SoFi was valued at $4.3 billion at the time. Last year, the fintech acquired Galileo Financial Technologies for $1.2 billion in cash and stock. SoFi also received conditional approval from the U.S. Office of the Comptroller of the Currency for a national bank charter in October.
SoFi’s management team is staying and the company will continue to be led by CEO Anthony Noto. “The new investments and our partnership with Social Capital Hedosophia signify the confidence in our strategy, the momentum in our business, as well as the significant growth opportunity ahead of us. We look forward to helping more people get their money right in the years to come,” Noto said in the statement.
Palihapitiya, a former Facebook (FB) executive, has used these special purpose acquisition companies, or SPACs, to buy several companies. Palihapitiya’s first blank-check company, Social Capital Hedosophia, merged with Virgin Galactic (SPCE) in 2019. His second SPAC, Social Capital Hedosophia II (IPOB), agreed to a $4.8 billion merger with Opendoor, a real estate start-up, in September. His third blank-check company, Social Capital Hedosophia Holdings Corp III, agreed to a $3.7 billion purchase of Clover Health in October. Clover will begin trading Friday on the Nasdaq.
Connaught and Credit Suisse (CS) provided financial advice to Social Capital Hedosophia, while Skadden, Arps, Slate, Meagher & Flom acted as legal advisor. Citi (C) and Goldman Sachs (GS) acted as financial advisors to SoFi, while Wachtell, Lipton, Rosen & Katz and Goodwin Procter were legal advisors.
Write to Luisa Beltran at [email protected]
