Alternative Finances

SoFi Tried To Sell Itself For $8B Earlier This Year

According to reports in The Financial Times, SoFi explored the possibility of an $8 billion sale earlier this year — a process that went far enough that it held talks with San Francisco-based broker Schwab.

Those sale discussions were brought on by a $6 billion offer from a foreign bank, according to unnamed sources. The offer followed a $500 million fundraising round that left SoFi with a valuation a little north of $4 billion. Inspired by international interest, SoFi moved into talks with other possible firms for a buyout — though the desired price at that time was $8 billion to $10 billion.

The offer to buy one of the nation’s more successful online lenders attracted interest, but not at that desired price, and so no deal seems to have come of it, with SoFi instead opting to wait for a 2019 IPO.

SoFi is the most valuable alternative lender in the U.S., worth nearly twice what Lending Club (now a publicly listed alternative lender) is currently worth. Had the discussion ended in a sale, SoFi would have been the biggest venture-backed buyout since WhatsApp went for a cool $22 billion in 2014.

As of yet, neither SoFi nor Schwab provided comments.

SoFi got into financial services by offering student loans to alumni of the top U.S. universities on the assumption that elite students were more worthy of long-term credit — and thus offered them lower rates.

SoFi has since grown its offering to include mortgages and consumer loans, and it also nurtures a social atmosphere for its users, which keeps marketing overhead down. By reports, it is approaching a customer base of around 500,000.

But things have looked choppier for SoFi of late, as a variety of sexual harassment allegations and lawsuits have plagued its founding CEO Mike Cagney, who has since departed.

The search for a new CEO is on, but the fallout has already cost the startup a banking license it had been seeking, which would have given it access to low-cost deposit funding.

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