Social Finance, the online lender, has been holding talks with banks during the past few weeks in an effort to raise around $500 million in an unsecured line of credit to fund mergers and acquisitions of other FinTechs.
The Wall Street Journal, citing people familiar with the matter, reported SoFi's new head Anthony Noto, who previously worked at Goldman Sachs, wants to boost acquisitions so that SoFi can morph into a full financial services firm. The Wall Street Journal noted that in June the fintech hired Bill Tanona, most recently finance chief at venture capital firm GSV Capital as the head of internal deal-making at SoFi. “We won’t have a mentality that everything has to be built internally,” Noto said at an industry conference in late June covered by the Wall Street Journal. “We don’t have any near-term plans, but we’re building a strategy and a process to evaluate the different opportunities as they come our way.”
Under Noto's charge, SoFi is looking to get into banking services and wealth management and could do that via buys or partnerships. SoFi waded into the market last month by rolling out a checking account and debit cards and will give customers the ability to buy and sell stocks and other investment products later in 2018. By acquiring a FinTech it could help the company deal with an environment that is getting tougher to operate in thanks in part to the Federal Reserve's move to raise interest rates this year. With short-term interest rates moving higher the cost of borrowing money from banks and institutions to make consumer loans is increasing. In a May letter to investors seen by The Wall Street Journal Noto said the interest rate hikes are a "challenge to our financial performance."
As for a potential initial public offering, The Wall Street Journal reported that at the conference in June Noto said it's not a priority for the company. People familiar with SoFi told the paper that an IPO would be in late 2019 at the earliest.