CNBC Disruptor 50

Online lender SoFi has a new $105 million fund for yield-hungry investors

Mike Cagney, CEO of SoFi.
John Chiala | CNBC

SoFi, the online lending start-up sporting a lofty $4.3 billion valuation, has just raised a $105 million fund to give outside investors another way to buy into the company's loans.

In a regulatory filing Monday afternoon, SoFi Prime Income Fund is listed as the issuer of equity in a limited partnership. According to the filing, the fund has 33 investors that put in a minimum of $500,000 each.

Nino Fanlo, SoFi's chief financial officer, said the fund is the first of its kind for SoFi and provides another avenue to raise capital for issuing loans. Returns after fees are expected to be in the low double digits, he said.

"It's a way to get broad exposure at market price," Fanlo said. "You get the opportunity to participate in a broad swath of transactions."

Since its inception in 2011, SoFi has issued $18 billion in loans, ranging from refinancing student debt to providing mortgages and personal loans. The company is among the biggest in a new crop of Bay Area lenders that are taking on traditional banks by combining software-driven underwriting and a savvy mobile and web interface with a heavy investment in customer service.

SoFi gets $1 billion
SoFi gets $1 billion

The money in the new fund is primarily from family offices looking for high-yielding debt through a more passive approach than investing in individual loans. The fund will invest in SoFi's unsecured loans -- student and personal.

To date, SoFi has raised debt capital from a combination of institutions and wealthy individuals. It's also been ramping up the use of securitizations for its student loan business. Moody's rated $461.5 million worth of SoFi asset-backed securities in March. And Fitch Ratings said in late 2016 that it was preparing to rate the first SoFi mortgage-backed securitization.

The company has also been raising buckets of equity to expand the business.

In February, SoFi brought in $500 million from investors including Silver Lake Partners at a reported $4.3 billion valuation. In 2015, Softbank led a $1 billion funding round.