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SoFi Is Officially Going Public; Here's Which SPAC Is Making It Happen

By Matthew Frankel, CFP® - Jan 7, 2021 at 1:10PM

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Sources indicate a deal could come very soon.

Chamath Palihapitiya has orchestrated some pretty impressive deals through special purpose acquisition companies (SPACs) in the past couple of years, including Virgin Galactic Holdings ( SPCE -4.71% ) and Opendoor Technologies ( OPEN -3.64% ). And with three pre-deal SPACs still searching for acquisition targets, investors have been anxiously waiting to see what he might take public next.

It appears we have our answer. Palihapitiya's fifth blank-check company, Social Capital Hedosophia Holdings V ( IPOE ), reportedly plans to take fintech start-up Social Finance (SoFi) public. The SPAC raised about $800 million in an IPO in 2020 and had been looking for an acquisition target ever since.

The deal values SoFi at $8.65 billion, including the money being contributed as part of the SPAC merger. 

Woman using laptop.

Image source: Getty Images.

SoFi is an online lender offering personal loans, mortgages, and student loan refinancing, as well as newer products and services like stock trading, a robo-advisor, and a credit card. The company was founded in 2011 and recently applied for a banking charter. It reported that it expects to generate about $1 billion in revenue in 2021.

It was widely reported about a month ago that SoFi was considering a 2021 IPO using a SPAC merger.

The company's most recent funding round valued SoFi at $5.7 billion in private markets, so while the rumored SPAC merger would certainly be a step up in valuation, it wouldn't be quite as much of a premium as many other recent IPOs have received.

The SPAC itself is holding more than $800 million that will be included, and there is expected to be a private investment in public equity (or PIPE) of $1.2 billion as well, so an $8.65 billion post-money valuation doesn't seem like a big stretch. 

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Stocks Mentioned

Social Capital Hedosophia Holdings Corp. V Stock Quote
Social Capital Hedosophia Holdings Corp. V
Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$14.37 (-4.71%) $0.71
Opendoor Technologies Inc. Stock Quote
Opendoor Technologies Inc.
$14.02 (-3.64%) $0.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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