January 7 (Reuters) – Online lending startup Social Finance Inc (SoFi) is approaching a deal to go public through a merger with Social Capital Hedosophia Holdings Corp V, a blank check acquisition company led by venture capitalist Chamath Palihapitiya, people familiar with the matter said on Thursday.
The deal values SoFi at more than $ 6 billion and could be announced in the next few days, the sources said, warning that negotiations could still fail and terms could be changed.
The sources requested anonymity because the negotiations are confidential. SoFi and Social Capital did not immediately respond to requests for comment.
Social Capital Hedosophia V is one of three so-called special-purpose acquisition companies (SPACs) backed by American investor Palihapitiya and Ian Osborne, based in London, who are currently looking for acquisitions.
SPAC is a front company that raises money in an initial public offering (IPO) to merge with a private company that then has its shares publicly traded.
They have emerged as a popular IPO alternative for companies, providing a way to go public with less regulatory scrutiny and more certainty about the valuation that will be obtained and the funds that will be raised.
Palihapitiya has been one of the most prolific sponsors of SPACs, merging them with a number of companies, from space tourism company Virgin Galactic Holdings Inc to domestic sales platform Opendoor Technologies Inc.
Share capital Hedosophia V raised about $ 800 million in an IPO on the New York Stock Exchange in October.
Founded in 2011, SoFi, based in San Francisco, capitalized on the reduction of large volumes of consumer loans by banks after the 2008 financial crisis.
It all started with refinancing student loans and expanded into mortgages and personal loans. The company said in October that it received preliminary and conditional approval from the U.S. Currency Controlling Office on its application for authorization from a national bank. The company also branched out into stock trading and cash management accounts.
Reuters reported in December that SoFi had held discussions with SPACs about a merger. (Reporting by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Edited by Steve Orlofsky)