SoFi takes in US$1.5bn haul on overnight block
SoFi Technologies flexed its opportunistic muscle by securing US$1.5bn overnight Thursday from a primary block sale of stock, the second-largest capital-committed raise by a US corporate this year and the fourth-largest block when including secondary selldowns.
Goldman Sachs, Citigroup, Mizuho Securities, Bank of America and Deutsche Bank offloaded their joint purchase of 54.5m shares at US$27.50, the bottom of the US$27.50–$28.50 marketing range and a 7.1% discount to the US$29.60 Thursday closing price.
Early in Friday’s session, SoFi’s shares were trading at US$27.52 or just above offer.
The fintech did this same trade via a similar but smaller syndicate in July, securing US$1.5bn at launch and US$1.7bn after factoring in a fully exercised greenshoe. Goldman Sachs, Citigroup and Mizuho Securities shared risk on that primary block purchase of 71.9m shares priced at US$20.85.
While nominally large, this is light work. SoFi sold 4.3% of share capital but less than one day's average daily trading volume.
SoFi has now bulked up its cash holdings to nearly US$5bn, making the raise a somewhat curious move.
SoFi CEO Anthony Noto, a former Goldman Sachs banker, referenced the July sale on the third quarter earnings call in October as “a successful opportunistic capital raise” relative to the growth in tangible book value to US$7.2bn at quarter-end.
SoFi offered up only general corporate purposes as the rationale for the raise, including to enhance its capital position, increase optionality and enable further efficiency with capital management.
SoFi is a company with heavy capital needs and a multitude of funding options, but this certainly seems like a lot of cash relative to its US$35bn market capitalisation.
“We are at an unprecedented point in time with two technology super cycles taking place in crypto, blockchain, and AI,” Noto said on the earnings call. “These super cycles have the power to completely reinvent the future of financial services, and we have moved fast to take advantage of these opportunities.”
In the third quarter, SoFi launched its SoFi Pay service that leverages blockchain for fast and low-cost international payments, as well as advanced crypto trading capabilities, and unveiled its AI-powered Cash Coach personalised financial management tool.
SoFi is also planning to launch its SoFi USD stablecoin.