January 7 (Reuters) – The start of online lending Social Finance Inc (SoFi) is nearing an agreement to be made public through a merger with Social Capital Hedosophia Holdings Corp V, an acquisition company of blank checks headed by venture capitalist Chamath Palihapitiya, people familiar with said the matter on Thursday.
The deal would value SoFi for more than $ 6 billion and could be announced in the coming days, sources said, warning that talks could still collapse and that terms could be changed.
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 three so-called special purpose acquisition companies (SPACs) with the support of American investor Palihapitiya and London-based Ian Osborne, who are currently seeking acquisitions.
An SPAC is a shell company that raises money in an initial public offering (IPO) to merge with a private company that is then traded on the stock exchange.
They have emerged as a popular IPO alternative for companies, providing a way to go public with less regulatory control and more security over the valuation that will be achieved and the funds that will be raised.
Palihapitiya has been one of SPAC’s most prolific sponsors, merging them with several companies, from space tourism firm Virgin Galactic Holdings Inc to home sales platform Opendoor Technologies Inc.
The share capital Hedosophia V raised about $ 800 million in a IPO on the New York Stock Exchange in October.
Founded in 2011, San Francisco-based SoFi capitalized on the reduction of banks from large strips of consumer lending after the 2008 financial crisis.
It began with student loan refinancing and expanded into mortgages and personal loans. The company said in October that it had received preliminary and conditional approval from the U.S. Currency Controller’s Office in its application for a national bank letter. The company has also branched out into securities trading and cash management instead.
Reuters reported in December that SoFi had held discussions with SPAC about a merger. (Report by Joshua Franklin in Miami, Anirban Sen in Bangalore and Krystal Hu in New York; Steve Orlofsky Edition)