Jan 7 (Reuters) – Social Finance Inc (SoFi), an online lending startup, nears a deal to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank check takeover firm led by venture capital investor Chamath Palihapitiya, familiar with the matter said Thursday.
The deal would value SoFi at more than $ 6 billion and could be announced in the coming days, the sources said, warning that talks could still fail and terms change.
The sources asked for anonymity because the negotiations are confidential. SoFi and Social Capital did not immediately respond to requests for comment.
Social Capital Hedosophia V is one of three so-called special purpose acquisition companies (SPACs) backed by US investor Palihapitiya and London-based Ian Osborne currently looking for acquisitions.
A SPAC is a shell company that raises money in an initial public offering (IPO) to merge with an unlisted company that is publicly traded as a result.
They have emerged as a popular IPO alternative for companies, offering a path to IPO with less regulatory oversight and more certainty about the valuation that will be achieved and the funds that will be raised.
Palihapitiya has been one of the most prolific sponsors of SPACs, merging them with a range of companies, from space tourism company Virgin Galactic Holdings Inc to home selling platform Opendoor Technologies Inc.
Social Capital Hedosophia V raised approximately $ 800 million in an initial public offering on the New York Stock Exchange in October.
Founded in 2011, SoFi benefited from the bank’s withdrawal from large volumes of consumer loans in the wake of the 2008 financial crisis.
It started with student loan refinancing and expanded to mortgages and personal loans. The company said in October that it had received preliminary, conditional approval from the US Office of the Comptroller of the Currency in its application for a charter from the national bank. The company has also branched out into stock trading and cash management accounts.
Reuters reported in December that SoFi had been in talks with SPACs about a merger. (Reported by Joshua Franklin in Miami, Anirban Sen in Bangalore, and Krystal Hu in New York; edited by Steve Orlofsky)