Lending startup SoFi is going public through a combination with the special-purpose acquisition company Social Capital Hedosophia Holdings Corp. V , in a deal that values the company at $8.65 billion, the companies said.
The company, officially named Social Finance Inc., began as a student loan refinance business and has expanded to mortgages, personal loans, credit cards, insurance, investing and deposit accounts on its platform for its 1.8 million members.
The companies on Thursday said they expect the transaction to provide up to $2.4 billion in cash proceeds, including a fully committed private investment in public equity of $1.2 billion and up to $805 million in cash held in the blank-check company’s trust account.
Also known as blank-check companies, SPACs effectively turn the traditional model for initial public offerings on its head by raising money before they develop a business. They use the proceeds to make an acquisition—usually within a couple of years—that converts the target into a public company.
The SPAC is one of the investment vehicles run by Chamath Palihapitiya, founder and managing partner of venture-capital firm Social Capital LP and a former Facebook Inc. executive, and Ian Osborne, co-founder and chief executive of venture-capital firm Hedosophia.