SoFi to become publicly-traded via merger with Social Capital Hedosophia

By Pavithra R

Social Finance (SoFi), a leading next-generation financial services platform, has announced entering into a definitive agreement with Social Capital Hedosophia Holdings Corp. V, a publicly traded special purpose acquisition company, to bring consumer-focused financial technology business to the public markets. 

SoFi is a values-driven company that helps people achieve financial independence to realize their ambitions. The FinTech is a member-centric, one-stop-shop for financial services, including loan refinancing, personal loans, credit cards, insurance, mortgages, investing and deposit accounts that help people borrow, save, spend, invest, and protect their money better. Its full suite of financial products offers members the speed, selection, content and convenience that an integrated digital platform can provide and allowing them to manage their financial lives in single application, all on their phone.

SoFi’s consumer offering is augmented by its ownership and independent operation of Galileo,a leading providers of critical technology infrastructure services, including customer-facing and back-end capabilities, to growing financial services providers. Galileo has approx. 50 mn accounts on its platform.

SoFi’s consumer and enterprise businesses are highly complementary, enabling the firm to provide product innovation and service speed to both SoFi members and the customers of Galileo’s clients. SoFi has experienced rapid acceleration with this strategy and has achieved 6 consecutive quarters of year-over-year member growth.

“SoFi is on a mission to help people achieve financial independence to realize their ambitions. 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. 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. We look forward to helping more people get their money right in the years to come,” said Anthony Noto, Chief Executive Officer of SoFi, who will continue to lead SoFi, following the transaction.

The transaction is expected to deliver up to $2.4 bn of gross proceeds to the combined company, including the contribution of up to $805 mn of cash held in SCH’s trust account from its IPO in October 2020. A $1.2 bn PIPE further supports the combination at $10 per share led by Chamath Palihapitiya, Founder and CEO of SCH, and Hedosophia, with commitments from funds and accounts managed by BlackRock, Baron Capital Group, Coatue Management, Durable Capital Partners LP, Altimeter Capital Management, and Healthcare of Ontario Pension Plan (HOOPP). SoFi has also received a previous anchor investment from funds and accounts advised by T. Rowe Price Associates, Inc.

SoFi received preliminary, conditional approval from the U.S. OCC for a national bank charter. If SoFi obtains final regulatory approval to own a bank, it would have a lower cost of funds to further support SoFi’s growth. Concurrent with closing, $150 mn of the transaction proceeds will be used for strategic secondary transactions that will help structure SoFi’s pro forma capitalization table in a way that is more conducive to obtaining an OCC national bank charter.