SoftBank invests $1bn in US fintech startup SoFi
Marking the first ever single major investment in financial technology (fintech) segment, SoftBank Group Corp has led an investment of $1billion in the US startup SoFi. Private equity (PE) firms such as Third Point have invested in SoFi. Both the companies are of a positive view that the Series E funding round will speed up the growth rate of SoFi. The fintech services are gaining support from customers, who're not satisfied with traditional banking services. SoFi is aiming at expanding financial offerings in the near future.
The US-based SoFi (Social Finance Inc) refinances mortgages, student loans, etc. Many startups banking on the software technology offer financial services. The deal is the latest one in fintech space. The Spanish firm Banco Santander SA in July offered to provide about $16mn for a suitable investment opportunity identified with British mobile banking software partner Monitise Plc.
With the latest round of funding, SoFi is expected to spread its market presence in financial technology services segment as the new generation of customers prefer to avail of loans from modern channels of lending. Mike Cagney, co-founder and CEO, SoFi, said: "SoFi aspires to be the most trusted financial services partner in the US."
SoFi has so far recorded a total lending amount of $4bn including student loans, mortgage, mortgage refinancing, personal loans, etc. The encouraging growth rate and fresh investment indicate the potential in the new channel of lending i.e. online lending. Started about four years ago, SoFi helped many graduates on refinancing loans at lower rates.
Nikesh Arora, President and COO of SoftBank Group Corp, said: "This investment gives SoftBank exposure to the financial services sector. SoFi is clearly a game changer in the fintech space."
Japanese firm SoftBank has been investing in startups for a long time. It has so far invested in well-known brands such as Alibaba Group Holdings Ltd and Yahoo Japan Corp. It had already completed a $500mn investment in Snapdeal, an Indian online e-commerce platform, in August. SoftBank has invested another round of $250mn in Grab Taxi, a Singapore-based start-up in late 2014.
Recently SoftBank has increased its stake in Sprint Corp, a US mobile phone carrier, from 81.99 percent to 83.19 percent. If the holding reaches to 85 percent, then it'll lead to the delisting of the company on New York Stock Exchange (NYSE) as per the listing norms.
However, SoftBank assured the investors that it doesn't reach the threshold limit of 85 percent. SoftBank's stock was trading higher 2.7 percent during the intraday. SoFi has been growing from student loans to personal loans and now aiming to offer wealth management services as well.