US-based digital personal finance company SoFi has brokered a deal to merge with special purpose acquisition company (SPAC) Social Capital Hedosophia Holdings, in order to go public.

The deal has been cleared by SCH’s board and the independent directors of SoFi’s board.

The deal values the consumer fintech firm at a post-money equity valuation of $8.6bn.

It comes a month after a report revealed that SoFi is looking for deals with SPACs, to make its stock market debut.

Deal terms

The combined company will be entitled to receive up to $2.4bn of gross proceeds.

This includes $805m in cash held in Social Capital’s trust account from its initial public offering (IPO) in October 2020.

SoFi’s existing shareholders will roll 100% of their equity into the merged entity.

Post-closing, $150m of the proceeds will be used to build its pro forma capitalisation table, as it seeks to obtain a national bank charter from the Office of the Comptroller of Currency (OCC).

The combination is further backed by a $10 per share private investment in public equity (PIPE) deal worth $1.2bn, led by entities backed by Social Capital CEO Chamath Palihapitiya.

BlackRock, Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners and Healthcare of Ontario Pension Plan also contributed to this funding.

Subject to the receipt of regulatory and shareholders approvals, the transaction is expected to close in the first quarter of 2021.

About Social Capital

Investment firms Social Capital and Hedosophia partnered to form Social Capital Hedosophia Holdings.

The SPAC unites technologists, entrepreneurs, and investors focussed on identifying and investing in innovative and agile technology companies.


Social Capital Hedosophia founder and CEO Chamath Palihapitiya said: “SoFi’s innovative, member-first platform has demystified financial services for millions of Americans and simplified the process for those looking to apply for loans, invest their money, obtain insurance and refinance their debt, among many other tasks that were previously arcane and needlessly complicated.

“Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability.”

SoFi CEO Anthony Noto said: “The new investments and our partnership with Social Capital Hedosophia signify the confidence in our strategy, the momentum in our business, as well as the significant growth opportunity ahead of us.”