×

With an IPO on the shelf, SoFi lets employees sell 20 percent of vested stock

  • SoFi let employees sell 20 percent of vested options ahead of a future IPO.
  • The company is valued at more than $4 billion by private investors.
  • The public market has not been kind to online lenders like LendingClub and On Deck.
SoFi’s CFO/COO Nino Fanlo (left) with CEO and co-founder Mike Cagney
Source: SoFi
SoFi’s CFO/COO Nino Fanlo (left) with CEO and co-founder Mike Cagney

Online lender SoFi is letting employees cash out a portion of their holdings to give them liquidity as the company waits to go public.

Last month, SoFi employees and ex-employees were permitted to sell 20 percent of their vested options in a secondary share sale that totaled $336.5 million, according to sources familiar with the matter. The offering priced the shares at $16.30, said one source, who asked not to be named because the deal was confidential.

According to an e-mail viewed by CNBC.com, SoFi CEO Mike Cagney held a conference call on March 16, to "provide an update on the business and details of the tender offer." In a separate e-mail, the company said, "SoFi investors are launching a tender offer to purchase existing shares of SoFi in a secondary market transaction." The sale took place in April.

Founded in 2011, SoFi has quickly grown to become one of the most valuable private companies in technology, raising $1.5 billion since August 2015 at a valuation that now exceeds $4 billion. According to SharesPost, SoFi's share price in the 2015 deal $15.87.

SoFi got its start refinancing student loans at rates below the price of federal loans. The company has since expanded into mortgages and personal loans, targeting younger borrowers who would prefer to do all of their transactions online. According to its website, SoFi has 275,000 members and has funded $18 billion in loans.

The public markets have been a challenge for emerging online lenders. LendingClub, which provides primarily consumer loans, has dropped 63 percent since its IPO in December 2014, and small business lender On Deck Capital is down 79 percent since its debut the same month. Subprime lender Elevate Credit slashed its IPO price by about half last month the day before its offering.

By allowing employees to sell one-fifth of their shares now, SoFi is letting stakeholders lock in some gains at a high private market price while the company grows into its valuation. An IPO could still be a year or more off, sources said, and even after the offering employees are typically forbidden from selling for at least six months.