SoFi goes public with $8.65bn valuation

Financial services platform Social Finance (SoFi) is going public through a deal with Social Capital Hedosophia Holdings, which is listed on the New York Stock Exchange as a special purpose acquisition company (SPAC).

The SoFi consumer-focused financial technology business will come to the public market with an equity value of $8.65 billion.

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

SoFi is a member-centric, one-stop shop for financial services, including loan refinancing, mortgages, personal loans, credit cards, insurance, investing and deposit accounts, that has so far served 1.8 million members since being founded in 2011.

It has a high brand recognition through the naming rights it has for the SoFi Stadium in Los Angeles, the home of the Los Angeles Chargers and the Los Angeles Rams.

SoFi’s consumer offering is augmented by its ownership and independent operation of Galileo, a leading provider of critical technology infrastructure services, including customer-facing and back-end capabilities, to fast-growing financial services providers.

Galileo has approximately 50 million accounts on its platform.

SoFi received preliminary, conditional approval from the US Office of the Comptroller of the Currency (OCC) for a national bank charter in October 2020.

If SoFi obtains final regulatory approval to own a bank, it says it would have a lower cost of funds to further support its growth.

SoFi delivered over $200 million in total net revenue in the third quarter of 2020, and says it is on track to generate approximately $1 billion of estimated adjusted net revenue in 2021 - representing year-over-year growth of around 60 per cent, and full-year adjusted EBITDA profitability.

Anthony Noto, chief executive officer of SoFi, said: “Our ecosystem of products, rewards and membership benefits all work together to help our members get their money right. With the secular acceleration in digital-first financial services offerings, SoFi is the only company providing a comprehensive solution all in one app.”

He added: “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.”

Chamath Palihapitiya, founder and CEO of Social Capital Hedosophia V (SCH), 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.

“Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability.”

The transaction is expected to deliver up to $2.4 billion of gross proceeds to the combined company, including the contribution of up to $805 million of cash held in SCH’s trust account from its initial public offering in October 2020.

The combination is further supported by a $1.2 billion PIPE at $10 per share led by Chamath Palihapitiya and Hedosophia, with commitments from funds and accounts managed by BlackRock, Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners LP, and Healthcare of Ontario Pension Plan (HOOPP).

SoFi also received a previous anchor investment from funds and accounts advised by T Rowe Price Associates.

Existing SoFi shareholders will roll 100 per cent of their equity into the combined company.

The transaction, which has been unanimously approved by SCH’s board of directors and the independent directors of SoFi’s board of directors, is expected to close in the first quarter of 2021.

    Share Story:

Recent Stories


New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.