Figure Acquisition Corp. I, a blank check company affiliated with fintech Figure Technologies, plans to merge with a warehouse lender and bank holding company to potentially bring blockchain technology to the financial institution.
The special purpose acquisition company announced Friday that it signed a non-binding letter of intent with the privately held $3-5 billion asset holding company with nationwide residential mortgage lending and servicing operations.
“We believe the proposed transaction provides a unique value creation opportunity by combining the bank’s sound balance sheet, nationwide footprint and seasoned management team with our team’s deep understanding of, and experience with, the application of technology to regulated financial services businesses as well as the necessary capital to grow and execute against our shared vision of the future of banking,” Mike Cagney, chairman of the board of directors of Figure Acquisition, said in a prepared statement.
After the merger, it will be possible to start exploring how to leverage Figure’s digital asset registration technologies in the bank’s warehouse business, which could bring strong potential value to the bank and its warehouse customers, Figure Acquisition said.
According to Cagney, the SPAC is seeking stockholder approval of a six-month extension to complete its initial business combination by August 23, 2023.
Completion of the proposed transaction is subject to the completion of due diligence, the negotiation of a definitive merger agreement and satisfaction of the conditions negotiated, including the approval of the transaction by the stockholders, a filing with the U.S. Securities and Exchange Commission showed on Friday.
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“There can be no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated,” the 8-K statement said.
Blank check companies have allowed mortgage lenders and fintechs to go public via mergers in the past two years when interest rates were near zero, making speculative betting enticing for investors.
United Wholesale Mortgage went public in January 2021 after merging with Gores Holdings IV. Instant homebuyer Offerpad became a publicly traded business in September 2021 after it merged with Supernova Partners Acquisition Company.
However, a combination of rising redemption rates – which point to how many investors are exchanging their shares for their money back – and sharp interest rate increases made it an unfavorable environment for SPACs.
Digital mortgage lender Better.com and blank-check firm Aurora Acquisition Corp. – which announced plans to go public by the fourth quarter of 2021 in May – extended the deadline to conclude their merger agreement for the second time to March 2023 and have started discussing options in case the deal falls through.
Figure Acquisition’s attempt to merge with a mortgage bank comes following a collapsed deal between Figure Technologies and multichannel originator Homebridge Financial Services.
Figure Technologies, founded in 2018 by Cagney, uses proprietary platform Provenance Blockchain for loan origination, equity management, private fund services, banking and payments, according to its website. With more than 500 employees across the country, the company claims to have posted 89% team growth over the past year and helped more than 60,000 households in America.
About 10 months after Figure Technologies’ planned merger with Homebridge, announced in August 2021, regulatory delays led to a cancellation in June 2022. Cagney had said the companies will keep an ongoing strategic partnership, collaborating to advance Figure Technologies’ Provenance Blockchain platform.
While Cagney projected Figure Technologies’ origination volume will hit between $500 million and $1 billion this year, the firm didn’t respond to questions on whether it is on track to hit the expected figure.
Figure Technologies raised $1.6 billion in venture capital, including a $200 million Series D round in May with 10T Holdings and Morgan Creek Digital, as well as a $100 million funding facility from JPMorgan Chase in January 2021, according to Crunchbase.