SoFi to Go Public Via SPAC
The fintech is working with Chamath Palihapitiya, the mastermind behind 2020’s SPAC craze
TechCrunch
• less than 3 min read
Yesterday, SoFi confirmed it’s going public through a merger with a special purpose acquisition company (SPAC), a deal valuing the startup at $8.7 billion. Quick background:
- SoFi: a fintech company that’s moved beyond student loan refinancing to mortgages, insurance, wealth management, and even crypto trading.
- SPAC: a shell company that raises money through an IPO and then acquires or merges with a private company, thereby taking the private company public.
SoFi is doing the deed with the mastermind behind last year’s SPAC craze, Chamath Palihapitiya (second appearance in today’s newsletter, congrats). A prolific investor, Palihapitiya’s firm Social Capital Hedosophia has completed several high-profile SPACquisitions, including Virgin Galactic, Opendoor, and Clover Health (a deal that closed yesterday).
Zoom out: SPACs have been around for years, but took off in 2020 with over 240 of them announced and an average deal size of $335 million. But some investors have questioned massive payouts to SPAC managers, who often receive 20% equity, as well as mixed returns.
Looking ahead...Palihapitiya reserved tickers IPOA through IPOZ. The SPAC merging with SoFi, IPOE, gained 58% yesterday. Bets on who goes public through IPOF?
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