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Digital lender SoFi contemplating IPO

San Francisco-based firm considering a debut via SPAC

Digital lender SoFi is the latest firm to explore an independent public offering, according to a new report.

SoFi, headquartered in San Francisco, has held talks with a number of blank-check companies to go public, according to CNBC.

The lender was last valued at $4.8 billion after a funding round last year. While it is best known for refinancing student loans, the startup also offers a variety of other financial products, including personal loans, small business loans, home equity loans and mortgages.

SoFi has made a big push in recent years to move beyond a specialization in student loan refinancing. In 2016, SoFi announced a partnership with Fannie Mae, which included a new loan option that permitted homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.

On the mortgage front, SoFi caters mostly to the jumbo market, and will fund loans as high as $3 million. The lender requires a minimum of 10% down on all mortgages, but doesn’t require PMI on loans. Though it doesn’t bake in origination fees, there is a one-time $1,495 loan processing fee. Borrowers with an existing SoFi product can get a $500 reduction on the loan processing fee.

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SoFi doesn’t originate government-backed loans, so it won’t be the top option for FHA or VA borrowers. SoFi does, however, offer conforming conventional mortgages (10-, 15-, 20- and 30-year fixed mortgages).

According to Pitchbook data, SoFi has raised over $3 billion in capital. Backers include the sovereign wealth fund of Qatar, private equity firm Silver Lake and tech investor Peter Thiel. If it ends up going the SPAC route, it will follow two other mortgage lenders to choose the investment vehicle: United Wholesale Mortgage and Blackstone-owned Finance of America are both expected to go public in the next few months.

The company said that it had recently received preliminary, conditional approval from the Office of the Comptroller of the Currency to establish a national bank charter. The company has also branched out into stock trading and cash management accounts.

In June 2019, three of SoFi’s top executives left the company amid reported struggles with profitability.

According to data from Recursion Companies, SoFi has securitized about $1.9 billion in mortgages in 2020, with a servicing book valued at about $2.5 billion as of Dec. 1.

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