Chamath Palihapitiya to Take Online Lender SoFi Public via SPAC

Joshua Fraser Jan 27th, 2021 / Sofi, Acquisition, Chamath Palihapitiya, Spac


US-based online personal finance startup Social Finance, Inc. (SoFi) is all set to go public by merging with Social Capital Hedosophia Corp V ( SPAC) in a deal worth $8.65 billion. It is further anticipated that SoFi would earn up to $2.4 billion in cash proceeds from this agreement.

Social Capital Hedosophia Corp V is a blank check organization and is one of the three so-called Special Purpose Acquisition Companies (SPACs), sponsored by equity capital investor Chamath Palihapitiya. Palihapitiya has become one of the most prominent sponsors of SPACs, combining them with several businesses,i.e., from space tourism organization Virgin Galactic Holdings to home-selling corporation Opendoor Technologies. He said SoFi was an appealing choice based on its ability to fulfill new, mobile-first customers' needs. $800 million was raised by Social Capital Hedosophia V raised about $800 million in an IPO on the New York Stock Exchange at around October 2020.

Established in 2011, SoFi was estimated at $4.3 billion in its previous private funding round. It has capitalized on the stagnation of banks from large consumer lending sections in the after-effect of the 2008 economic meltdown. Anthony Noto, a former investment banker at Goldman Sachs Group Inc and a former chief operating officer of Twitter Inc., has surpassed SoFi’s co-founder Mike Cagney as the new CEO of SoFi.

SoFi offers a suite of financial products through both its mobile app and desktop interfaces, including student loan refinancing, mortgages, personal loans, credit cards, savings, and banking. According to Noto, SoFi expects to achieve around $1 billion of adjusted net revenue in 2021, a 60% rise from the previous years.

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