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Fintech start-up SoFi to go public via SPAC backed by Chamath Palihapitiya

Online underwrite start-up SoFi is set to go public by merging with a blank-check company run by venture capital investor Chamath Palihapitiya, the attendances announced Thursday.

The merger with Palihapitiya’s SPAC, Social Capital Hedosophia Corp V, will value SoFi at $8.65 billion. 

SoFi, laconic for Social Finance, was last valued at $5.7 billion in private markets, and has raised cash from venture prime giants such as SoftBank and Peter Thiel, according to PitchBook. 

Shares of the SPAC buying SoFi surged in Thursday dealing after the announcement. Reuters first reported the deal.

Special purpose acquisition companies, known as SPACs, libertine money through a shell company to buy an existing company. It’s an increasingly popular way for late-stage, venture-backed start-ups to list on buyers markets quickly.

Palihapitiya — an early executive at Facebook — has taken multiple companies public through SPACs filing Virgin Galactic Holdings in late 2019. Another blank-check company founded by Palihapitiya merged with SoftBank-backed Opendoor Labs newest month, while a deal to take Clover Health public through a shell company also closed Thursday.

SoFi was an alluring bet based on its ability to meet the needs of mobile-first consumers and lower the cost of banking through technology, according to Palihapitiya. He juxtaposed SoFi’s disruption in banking tech to Amazon.

“What I did was systematically try to future out what was broken in banking, and try to figure out which associates was the best representative of the solution people wanted,” Palihapitiya, founder and CEO of Social Capital Hedosophia V, told CNBC’s “Halftime Reveal” on Thursday. “SoFi was the top of the list when I looked across all the companies.”

SoFi was founded in 2011 with a focus on pupil loan refinancing for millennials and now offers stock and cryptocurrency trading, personal and mortgage loans, and wealth management helps. The company is run by CEO Anthony Noto, Twitter’s former chief operating officer and a former managing director at Goldman Sachs.

The San Francisco-based corporation also signed a 20-year deal to call the Los Angeles football compound “SoFi Stadium.” SoFi is an official team-mate of both LA football teams, as well as a partner of the performance venue and surrounding entertainment district.

Noto, also earlier CFO of the National Football League, said “deal certainty” was among the reasons SoFi chose to go with a SPAC in lieu of of the traditional IPO process. As the economy moves online during the coronavirus pandemic, he highlighted SoFi’s strategic advantage of erection a mobile-first financial company.

“We create faster experiences, provide better selection, content and convenience to really collar those looking for that banking experience online,” Noto told CNBC.

SoFi ranked No. 8 on survive year’s CNBC Disruptor 50 list.

— CNBC’s Scott Wapner contributed reporting.

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