Please ensure Javascript is enabled for purposes of website accessibility

SoFi Moving Forward With Pre-IPO and SPAC Offering Plans

By Bram Berkowitz - May 11, 2021 at 4:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company was named as an underwriter in a recent SPAC registration statement.

SoFi will soon go public through Chamath Palihapitiya's blank-check company Social Capital Hedosophia Holdings Corp. V (IPOE). SoFi will serve as an underwriter in an upcoming initial public offering (IPO) for a special purpose acquisition company (SPAC).

The move shows that the online lender is moving forward with its plans to allow retail investors to invest in IPOs and SPACs at the pre-listing stage.

SoFi runs an online brokerage as part of its sprawling financial services organization. Earlier this year, the company said it would make it possible for members with at least $3,000 of cash and settled assets in their SoFi Invest accounts to participate in new offerings before they hit the public markets.

Yellow background with letters I.P.O in middle.

Image source: Getty Images.

"We have a very different customer base, members who are high earners, not well served," SoFi's CEO Anthony Noto told Reuters back in March. "It's a client base that is interested in investing, is actively managing a portfolio and focused on financial objectives. Their interest is in line with issuers."

Noto also told Reuters that SoFi has already received regulatory approval to run this pre-IPO business and that the company would obtain shares by acting as a "passive" underwriter on certain IPOs or SPACs.

It can be very advantageous to get in on IPOs before they hit the public markets because by the time that some do, their stock price has already appreciated to a high valuation, offering limited upside for retail investors. 

And while SPACs have not fared well lately, it can also be advantageous to purchase SPAC units early because you can purchase an ordinary share and part of a warrant for $10 per unit. Fifty-two days after the IPO, SPAC shares and warrants separate. 

Bram Berkowitz has the following options: long July 2021 $17.50 calls on Social Capital Hedosophia Holdings Corp. V. The Motley Fool owns shares of and recommends Social Capital Hedosophia Holdings Corp. V. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Social Capital Hedosophia Holdings Corp. V Stock Quote
Social Capital Hedosophia Holdings Corp. V

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.