January 7 (Reuters) – The launch of online lending by Social Finance Inc (SoFi) nears an agreement to become known through a merger with Social Capital Hedosophia Holdings Corp V, a venture capital check led by venture capitalist Chamath Palihapitiya, people familiar with the matter said Thursday.
The deal will cost SoFi more than $ 6 billion and could be announced in the coming days, the sources said, warning that talks could still collapse and change the terms.
The sources asked for 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 the three so-called special purpose acquisition companies (SPACs) backed by US-based US investor Palihapitiya and Ian Osborne, who are currently seeking acquisitions.
A SPAC is a shell company that raises money in an initial public offering (IPO) to merge with a private company that then trades in public as a result.
It is a popular alternative to IPO for companies, and provides a way to the public with less regulatory scrutiny and more certainty about the valuation that will be achieved and funds that will be raised.
Palihapitiya was one of the most productive sponsors of SPACs and merged it with a range of companies, from the space tourism industry Virgin Galactic Holdings Inc to the platform Opendoor Technologies Inc.
Social Capital Hedosophia V raised about $ 800 million in October on a New York Stock Exchange.
Founded in 2011, SoFi took advantage of the withdrawal of banks from large amounts of consumer loans in San Francisco in the wake of the 2008 financial crisis.
It started with the refinancing of student loans and expanded to mortgage loans and personal loans. The company said in October it had received preliminary, conditional approval from the U.S. Office of the Currency Controller in its application for a national banking charter. The company also has branches in stock trading and cash management accounts.
Reuters reported in December that SoFi was in talks with SPACs about a merger. (Report by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; edited by Steve Orlofsky)