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SoFi, A Leading Next-Generation Financial Services Platform, Announces Plans to Become Publicly-traded via Merger with Social Capital Hedosophia

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Social Finance, Inc. (“the Company” or “SoFi”), a leading next-generation financial services platform, has entered into a definitive agreement with Social Capital Hedosophia Holdings Corp. V (“SCH”) (NYSE: IPOE), a publicly traded special purpose acquisition company, to bring a major consumer-focused financial technology business to the public markets. The transaction values the Company at an equity value of $8.65 billion post-money.

Company Overview

SoFi is a member-centric, one-stop shop for financial services, including loan refinancing, mortgages, personal loans, credit cards, insurance, investing and deposit accounts, that has allowed more than 1.8 million members to borrow, save, spend, invest and protect their money since its inception. SoFi’s full suite of financial products offers members the speed, selection, content and convenience that only an integrated digital platform can provide and allows them to manage their financial lives in one application, all on their phone.

SoFi’s consumer offering is augmented by its ownership and independent operation of Galileo, one of the leading providers of critical technology infrastructure services, including customer-facing and back-end capabilities, to fast-growing financial services providers. Galileo has approximately 50 million accounts on its platform.

SoFi’s consumer and enterprise businesses are highly complementary, enabling SoFi to provide faster product innovation and speed of service to both SoFi members and the customers of Galileo’s clients. SoFi has experienced rapid acceleration with this strategy and has achieved six consecutive quarters of year-over-year member growth.

SoFi received preliminary, conditional approval from the U.S. Office of the Comptroller of the Currency (OCC) for a national bank charter in October 2020. If SoFi obtains final regulatory approval to own a bank, it would have a lower cost of funds to further support SoFi’s growth.

SoFi delivered over $200 million in total net revenue in the third quarter of 2020 and is on track to generate approximately $1 billion of estimated adjusted net revenue in 2021, representing year-over-year growth of approximately 60 percent, and full-year adjusted EBITDA profitability.

The Company’s world-class management team, led by CEO Anthony Noto, will continue to lead SoFi following the transaction.

Management Comments

Anthony Noto, Chief Executive Officer of SoFi, said: “SoFi is on a mission to help people achieve financial independence to realize their ambitions. Our ecosystem of products, rewards and membership benefits all work together to help our members get their money right. With the secular acceleration in digital-first financial services offerings, SoFi is the only company providing a comprehensive solution all in one app. The new investments and our partnership with Social Capital Hedosophia signify the confidence in our strategy, the momentum in our business, as well as the significant growth opportunity ahead of us. We look forward to helping more people get their money right in the years to come.”

Chamath Palihapitiya, Founder and CEO of Social Capital Hedosophia V, said: “SoFi’s innovative, member-first platform has demystified financial services for millions of Americans and simplified the process for those looking to apply for loans, invest their money, obtain insurance and refinance their debt, among many other tasks that were previously arcane and needlessly complicated. Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability. We look forward to partnering with Anthony and his team as they help even more members to achieve financial independence.”

Transaction Overview

The transaction is expected to deliver up to $2.4 billion of gross proceeds to the combined company, including the contribution of up to $805 million of cash held in SCH’s trust account from its initial public offering in October 2020. The combination is further supported by a $1.2 billion PIPE at $10 per share led by Chamath Palihapitiya, Founder and CEO of SCH, and Hedosophia, with commitments from funds and accounts managed by BlackRock, Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners LP, and Healthcare of Ontario Pension Plan (HOOPP). SoFi also received a previous anchor investment from funds and accounts advised by T. Rowe Price Associates, Inc.

Existing SoFi shareholders will roll 100 percent of their equity into the combined company. Concurrent with closing, $150 million of the transaction proceeds will be used for strategic secondary transactions that will help structure SoFi’s pro forma capitalization table in a way that is more conducive to obtaining an OCC national bank charter. All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public shareholders of SCH and payment of transaction expenses.

The transaction, which has been unanimously approved by SCH’s board of directors and the independent directors of SoFi’s board of directors, is expected to close in the first quarter of 2021, and is subject to approval by SCH’s shareholders and other customary closing conditions, including any applicable regulatory approvals.

Advisors

Connaught acted as financial advisor, Credit Suisse acted as financial advisor, capital markets advisor and placement agent, and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to SCH. Citi and Goldman Sachs & Co. acted as financial advisor and placement agent, and Wachtell, Lipton, Rosen & Katz and Goodwin Procter LLP acted as legal advisors to SoFi.

Investor Conference Call

Management of SoFi and SCH will host an investor conference call on January 7, 2021 at 1 PM ET to discuss the proposed transaction and review an investor presentation. For those investors who wish to participate, the conference call can be accessed by visiting https://event.on24.com/wcc/r/2952606/91A65736AA851D7C8A87FAB7D07BB896.

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