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Social Capital Hedosophia Holdings Corporation V

Social Capital Hedosophia Holdings Corporation V

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: SoFi

ENTERPRISE VALUE: $6.6 billion
ANTICIPATED SYMBOL: SOFI

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 with an enterprise value of $6.6 billion.

SoFi is a member-centric, one-stop shop for financial services, including loan refinancing, mortgages, personal loans, credit cards, insurance, investing and deposit accounts with more than 1.8 million members. 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 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.

The transaction is expected to close in the first quarter of 2021.

TRANSACTION SUMMARY

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 $1.225 billion PIPE. 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.

sofi 1

sofi 2

PIPE

  • Investors have fully committed to a $1.225 billion PIPE for shares at $10/share.
  • The PIPE is being led by Chamath Palihapitiya, Founder and CEO of SCH, and Hedosophia, who are together contributing $275 million
  • For the remaining $950 million of the PIPE, investors include: BlackRock, Altimeter Capital Management, Baron Capital Group, Coatue Management, Durable Capital Partners LP, and Healthcare of Ontario Pension Plan (HOOPP)

NOTABLE CONDITIONS TO CLOSING

  •  the amount of cash available in
    • (x) the trust account, after deducting the amount required to satisfy SCH’s obligations to its shareholders (if any) that exercise their rights to redeem, but prior to payment of:
      • (a) any deferred underwriting commissions being held in the Trust Account,
      • (b) any transaction expenses of SoFi or its subsidiaries and
      • (c) any transaction expenses of SCH or its affiliates plus
    • (y) the PIPE Investment is at least equal to or greater than $900,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • If the Closing has not occurred on or before the Agreement End Date (the date that is six (6) months after the date of this Agreement, which is January 7, 2021)

SPONSOR SUPPORT AGREEMENT

  • Social Capital and Sofi have entered into a support agreement pursuant to which both parties have agreed to vote in favor of the merger agreement and not to redeem their shares

LOCK-UP

Such restrictions begin at the Closing and end on the earlier of:

  • (i) the date that is 180 days after the Closing and
  • (ii)(a) for 33% of the Lock-up Shares, the date on which the last reported sale price of SCH Common Stock equals or exceeds $12.50 per share for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing and
  • (ii)(b) for an additional 50% of the Lock-up Shares, the date on which the last reported sale price of SCH Common Stock equals or exceeds $15.00 per share for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing.

SHAREHOLDERS AGREEMENT

  • The combined company, the Sponsor and certain equityholders of SoFi will enter into a Shareholders’ Agreement, pursuant to which following the Closing, the combined company will enter into a Share Repurchase Agreement with SoftBank Group Capital Limited (“SoftBank”) committing the combined company to repurchase, in the aggregate, $150 million of shares of the combined company common stock owned by affiliates of SoftBank at a price per share equal to $10.00.

SERIES 1 INVESTORS’ AGREEMENT

  • Social Capital has entered into an agreement with SoFi and SoFi’s investors pursuant to which Social Capital will assume the obligations of SoFi in respect of Acquiror Series 1 Preferred Stock

ADVISORS

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

SOCIAL CAPITAL HEDOSOPHIA V MANAGEMENT & BOARD

Executive Officers

Chamath Palihapitiya, 43
Chief Executive Officer & Chairman

Mr. Palihapitiya founded Social Capital in 2011 and has been its Managing Partner since its inception. Mr. Palihapitiya served as the Chief Executive Officer and the Chairman of the Board of Directors of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019, and continues to serve as the Chairman of the Board of Directors of Virgin Galactic. Mr. Palihapitiya currently serves as Chief Executive Officer and Chairman of IPOB, IPOC, IPOD and IPOF. Mr. Palihapitiya also served as a director of Slack Technologies Inc. from April 2014 until October 2019. Prior to founding Social Capital in 2011, Mr. Palihapitiya served as Vice President of User Growth at Facebook, and is recognized as having been a major force in its launch and growth. Mr. Palihapitiya was responsible for overseeing Monetization Products and Facebook Platform, both of which were key factors driving the increase in Facebook’s user base to more than 750 million individuals worldwide. Prior to working for Facebook, Mr. Palihapitiya was a principal at the Mayfield Fund, one of the United States’ oldest venture firms, before which he headed the instant messaging division at AOL. Mr. Palihapitiya graduated from the University of Waterloo, Canada with a degree in electrical engineering.

Ian Osborne, 36
President & Director

Mr. Osborne is the Co-founder and Chief Executive Officer of Hedosophia, an investment firm, which has invested in leading Internet and technology companies since 2012. Mr. Osborne served as a director of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019. Mr. Osborne currently serves as President and a director of IPOB, IPOC, IPOD and IPOF. Mr. Osborne has advised leading Internet and technology companies, their founders and CEOs, since 2009. Mr. Osborne is also the indirect controlling shareholder and a director of Connaught, a financial advisory firm. From 2010 to 2012, Mr. Osborne was a Partner and Managing Director at DST Global, a family of funds investing in Internet companies, which was established in 2009 and which has notable successes including Alibaba, Airbnb, Facebook, Spotify and Twitter. Mr. Osborne was educated at St Paul’s School, King’s College London, and the London School of Economics.

Steven Trieu, 41
Chief Financial Officer

Mr. Trieu is a Partner and the Chief Financial Officer of Social Capital, an affiliate of the company’s sponsor, since October 2017 and is responsible for overseeing the operations of Social Capital’s family of funds, management company and related entities. Mr. Trieu served as the Chief Financial Officer of IPOA from March 2019 until the consummation of its business combination with Virgin Galactic in October 2019. Mr. Trieu currently serves as Chief Financial Officer of IPOB, IPOC, IPOD and IPOF. Prior to joining Social Capital, Mr. Trieu was VP of Finance at Quora, Inc. from October 2011 to June 2016, where he was responsible for its day-to-day finance and legal operations. Prior to that, Mr. Trieu was Director, Finance and Business Operations at Facebook, Inc. from August 2007 to October 2011. Mr. Trieu led the formation of its initial business operations and sales finance teams. Mr. Trieu also previously held a similar role at Yahoo!, Inc., supporting its local markets and commerce divisions. Before that, Mr. Trieu spent time on Wall Street both as an investment banking and alternative investments associate. Mr. Trieu graduated from the University of Massachusetts, Amherst with a degree in finance and economics.

Simon Williams, 39
General Counsel & Secretary

Mr. Williams has been Hedosophia’s Chief Administrative Officer since March 2017. Mr. Williams served as the General Counsel and Secretary of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019. Mr. Williams currently serves as General Counsel and Secretary of IPOB, IPOC, IPOD and IPOF. Prior to joining Hedosophia, Mr. Williams was legal counsel at Balderton Capital, a London-based venture firm focused on backing European-founded technology companies, from January 2015 to March 2017. Prior to working at Balderton Capital, Mr. Williams was an associate in the London offices of each of Covington & Burling LLP and Morrison & Foerster LLP. Mr. Williams is a solicitor, qualified in England & Wales, having attended Nottingham Law School. Mr. Williams holds an MA and BA from the University of Nottingham.

 

Board of Directors

Jay Parikh, 47
Director 

Mr. Parikh has served as Head of Engineering at Facebook, Inc., since March 2014, supporting and scaling tech teams across the company. From November 2009 to March 2020, Mr. Parikh served as Vice President, Infrastructure, where he lead the global teams that design, develop, build, and operate the physical infrastructure and platforms (both software and hardware) necessary to power Facebook and its family of products and services, enabling the community to grow from 300 million users to over 3 billion users and providing users with their real-time experiences. From October 2007 to October 2009, Mr. Parikh served as Senior Vice President, Engineering & Operations at Ning,Inc., where he oversaw product development, core infrastructure, and operations for the company’s social networking platform. From April 1999 to October 2007, Mr. Parikh served as Vice President of Engineering at Akamai Technologies,Inc., where he helped build one of the world’s largest and most globally distributed computing platform. Mr. Parikh has served on the board of directors of Atlassian Corporation Plc since July 2013. Mr. Parikh received his Bachelor of Science degree in mechanical engineering from Virginia Tech.

ByRoman Developer