Consumer financial services startup SoFi is closing in on a deal to go public via a merger with special purpose acquisition company, Social Capital Hedosophia Holdings Corp V, the latest blank check company formed by venture capital investor Chamath Palihapitiya.
An agreement to take SoFi public via a SPAC has been rumored for weeks. This latest advancement, which reveals Palihapitiya as the possible SPAC connection, was first reported by Reuters. The deal would reportedly give SoFi a valuation of more than $6 billion.
SoFi, which is now led by ex-Twitter COO Anthony Noto, was founded more than decade ago to offer ways to secure better financial terms for student loans. The company has expanded those offerings for consumers such as loan, investment and insurance products as well as cash and wealth management tools. It made a move into the B2B realm with its acquisition last April of Galileo.
SoFi has raised millions in capital since its founding, the most recent a $500 million round in 2019 that was led by Qatar Investment Authority, a Doha, Qatar-based private equity and sovereign wealth fund. The company was most recently valued at $4.3 billion.
Palihapitiya has been credited for kicking off the SPAC craze. SPACs, also known as blank-check companies, are formed for the purpose of merging or acquiring other companies. The shell company raises money in an initial public offering with the intent of merging with a privately held company that then becomes publicly traded. A slew of SPACs have occurred in the past 18 months.
In 2017, he raised $600 million for his first SPAC called Social Capital Hedosophia Holdings, which was ultimately used to take a 49% stake in the British spaceflight company Virgin Galactic. Social Capital Hedosophia Holdings Corp V is Palihapitiya’s third SPAC. His second merged with Opendoor in 2020.