Equity investors in Social Capital Hedosophia (SCH) Holdings Corporate V, the special purpose acquisition company (Spac) sponsored by Chamath Palihapitiya, a venture capitalist who made his name at Facebook and took Virgin Galactic public through another Spac last year, love his latest deal.
On January 7 it announced a merger agreement with SoFi, the fast-growing fintech that has transformed itself in the last three years from a provider of student loan refinancing funded from warehouse lines for securitization into a full-product challenger to US banks.
SoFi now also offers mortgages, personal loans, savings deposits, payments, credit cards, investments and insurance all in a single app. It is applying for a national banking charter. And while it needs investment to scale up – banking and technology both being capital-intensive businesses – it is becoming a public company just as its financials reach a tipping point where it might soon deliver operating profits.
The stock of SCH Holdings Corporate V shot up 90% on the news.
We believe the next decade will be a golden era for digital financial services
US Spac IPOs famously raised $80 billion in 2020.
