SoFi to Go Public Through .7 Billion Blank-Check Combination

SoFi to Go Public Through $8.7 Billion Blank-Check Combination

Lending startup SoFi is going public through a combination with the special-purpose acquisition company

Social Capital Hedosophia Holdings Corp. V,


IPOE 45.92{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}

in a deal that values the company at $8.65 billion, the companies said.

The company, officially named Social Finance Inc., began as a student loan refinance business and has expanded to mortgages, personal loans, credit cards, insurance, investing and deposit accounts on its platform for its 1.8 million members.

The companies on Thursday said they expect the transaction to provide up to $2.4 billion in cash proceeds, including a fully committed private investment in public equity of $1.2 billion and up to $805 million in cash held in the blank-check company’s trust account.

Also known as blank-check companies, SPACs effectively turn the traditional model for initial public offerings on its head by raising money before they develop a business. They use the proceeds to make an acquisition—usually within a couple of years—that converts the target into a public company.

The SPAC is one of the investment vehicles run by Chamath Palihapitiya, founder and managing partner of venture-capital firm Social Capital LP and a former

Facebook Inc.

executive, and

Ian Osborne,

co-founder and chief executive of venture-capital firm Hedosophia.

The private investment is being led by Mr. Palihapitiya and Hedosophia, which are contributing $275 million together, the companies said. Funds managed by

BlackRock Inc.,

Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners LP and Healthcare of Ontario Pension Plan are part of institutional investors contributing the remaining $950 million of the investment, the companies added.

The San Francisco-based company had more than $200 million in revenue in the third quarter last year, it said. It expects to generate about $1 billion in adjusted revenue in 2021, reflecting a year-over-year growth of about 60{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}.

Anthony Noto,

a former

Twitter Inc.

executive, will continue leading SoFi as CEO after the transaction closes, the companies said.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

SoFi received preliminary approval from the U.S. Office of the Comptroller of the Currency for a national bank charter in October. At closing, expected in the first quarter, $150 million of the transaction proceeds will go toward assisting SoFi in obtaining its bank charter, the companies said.

SoFi’s effort to start a bank came about three years after it abandoned a similar attempt following the departure of its founding CEO,

Mike Cagney.

Since then, regulators have warmed to the idea of Silicon Valley startups and tech companies starting their own banks. In March 2020,

Jack Dorsey’s

Square Inc.

got the green light to open its own bank in Utah, Square Financial Services Inc.

Write to Dave Sebastian at [email protected]

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