SoFi Technologies Inc is acquiring banking software maker Technisys SA for approximately $1.1 billion, the latest in a series of transactions aimed at transforming the lender into a one-stop financial shop.
The all-stock transaction represents roughly 10% of SoFi’s market value. The agreement gives SoFi control of its own core-banking platform, which is the back-end technology that banks use to power mobile banking apps, open accounts, and track customer deposits.
As aggregate consideration, Technisys shareholders would start to receive 84 million shares of SoFi common stock, representing less than 10% of SoFi’s fully diluted share count as of the end of September 2021. Based upon this volume-weighted average selling price of SoFi common shares for the 20-trading-day period ending February 15, these shares are worth roughly $1.1 billion.
The transaction is expected to result in the creation of an end-to-end vertical integration banking technology stack, ranging from user interface advanced capabilities to a customizable multi-product financial services core and ledger with completely integrated processing and card issuing availability.
SoFi anticipates that the acquisition’s estimated incremental revenue, including Technisys’ base revenue and revenue synergies from vertically integrated capabilities, might very well add a total of $500 to $800 million through the year 2025, at high incremental margins.
Vertical integration with Galileo, a provider of fintech cloud services, is also expected to generate $75 to $85 million in accumulated potential savings from 2023 to 2025, and $60 to $70 million annually afterwards.
SoFI expects to maintain its earlier communicated financial guidance for both the fourth quarter and fiscal year 2021 results, which are scheduled to be released following the close of capital markets on Tuesday, March 1. On the same day, the company will release financial guidance for 2022, which will include, among other things, the impact of a proposed Technisys acquiring, the effect of opening SoFi Bank, and the advancement of the federal student loan billing moratorium from January 31, 2022, to May 1, 2022.
SoFi’s financial advisor was Allen & Company LLC, and its legal counsel was Wachtell, Lipton, Rosen & Katz. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP served as the law firm’s representative to Technisys.
