Anthony Noto, CEO of SoFi
Adam Jeffery | CNBC
Online finance startup Social Finance (SoFi) is approaching an agreement to go public through a merger with Social Capital Hedosophia Holdings Corp V, a check-free acquisition company led by venture capitalist Chamath Palihapitiya, they said Thursday people familiar with the matter.
The deal would value SoFi at more than $ 6 billion and could be announced in the coming days, sources said, warning that talks could collapse and that terms could be changed.
The sources requested anonymity, as the negotiations are confidential. SoFi and Share Capital did not immediately respond to requests for comment.
Hedosophia V is one of three so-called special purpose procurement companies (SPACs), backed by US investor Palihapitiya and Ian Osborne of London, who are currently looking for acquisitions.
A SPAC is a shell company that raises money in an initial public offering (IPO) to merge with a private company that then becomes publicly traded as a result.
They have emerged as a popular alternative to IPOs for companies, providing a path to advertising with less regulatory control and more certainty over the valuation that will be achieved and the funds that will be raised.
Palihapitiya was one of the most prolific sponsors of SPACs, combining them with a number of companies, from the space travel company Virgin Galactic to the sales platform of Opendoor.
The share capital Hedosophia V raised around 800 million dollars in a transaction on the New York Stock Exchange in October.
Founded in 2011, SoFi in San Francisco has capitalized on the reduction of banks from a large share of consumer loans following the 2008 financial crisis.
It began with the refinancing of student loans and expanded into mortgages and personal loans. The company said in October that it had received conditional preliminary approval from the U.S. Currency Controller’s Office in its application for a national banking charter. The company also branched out into stock trading and cash management accounts.
Reuters reported in December that SoFi had talks with SPACs about a merger.