Deals and IPOs

SoFi nears deal to go public with SPAC backed by venture capital investor Palihapitiya, sources say

Key Points
  • Online lending startup Social Finance (SoFi) is nearing a deal to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank-check acquisition company led by venture capital investor Chamath Palihapitiya, people familiar with the matter said on Thursday.
  • The deal would value SoFi at more than $6 billion and could be announced in the coming days, the sources said, cautioning that the talks could still collapse and the terms could be changed.
  • Palihapitiya has been one of the most prolific sponsors of SPACs, merging them with a range of companies.

In this article

Anthony Noto, CEO of SoFi
Adam Jeffery | CNBC

Online lending startup Social Finance (SoFi) is nearing a deal to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank-check acquisition company led by venture capital investor Chamath Palihapitiya, people familiar with the matter said on Thursday.

The deal would value SoFi at more than $6 billion and could be announced in the coming days, the sources said, cautioning that the talks could still collapse and the terms could be changed.

The sources requested anonymity because the negotiations are confidential. SoFi and Social Capital did not immediately respond to requests for comment.

Social Capital Hedosophia V is one of three so-called special purpose acquisition companies (SPACs) backed by U.S. investor Palihapitiya and London-based Ian Osborne that are currently looking for acquisitions.

A SPAC is a shell company that raises money in an initial public offering (IPO) to merge with a privately held company that then becomes publicly traded as a result.

They have emerged as a popular IPO alternative for companies, providing a path to going public with less regulatory scrutiny and more certainty over the valuation that will be attained and funds that will be raised.

Palihapitiya has been one of the most prolific sponsors of SPACs, merging them with a range of companies, from space tourism firm Virgin Galactic to home-selling platform Opendoor.

Social Capital Hedosophia V raised around $800 million in an IPO on the New York Stock Exchange in October.

Founded in 2011, San Francisco-based SoFi capitalized on the retrenchment of banks from large swaths of consumer lending in the aftermath of the 2008 financial crisis.

It started with refinancing student loans and expanded into mortgages and personal loans. The company said in October it had received preliminary, conditional approval from the U.S. Office of the Comptroller of the Currency in its application for a national bank charter. The company has also branched out into stock trading and cash management accounts.

Reuters reported in December that SoFi had held discussions with SPACs about a merger.