SoFi Acquires Galileo in Major $1.2 Billion Deal
SoFi Money has already integrated with Galileo’s payment platform and included several of its leading accounts and events API functionalities. According to anonymous sources who are familiar with the matter, the deal involved $75 million in cash, $250 million in seller financing debt, and $875 million in company stock.
SoFi Acquires Galileo – Explained
As per a company release, Social Finance, Inc., popularly known as SoFi, has acquired Galileo Financial Technologies in a $1.2 billion deal involving both cash and stock. The acquisition is subject to customary closing conditions. Galileo is expected to operate as an independent subsidiary of SoFi, with founder Clay Wilkes remaining as CEO.
SoFi is an American online personal finance company which is widely regarded as one of the best robo-advisors on the market. Beyond investing, the FinTech firm provides banking, mortgages, personal loans, and student loan refinancing.
By acquiring Galileo, SoFi now has a component for B2B revenue. Over the past few years, SoFi has steadily grown to become a Unicorn challenger bank and is currently valued at $4.3 billion. It is helmed by ex-Twitter COO Anthony Noto.
Wilkes founded Galileo back in 2000. The Salt Lake City-based fintech company provides APIs that allow companies to create bank accounts and issue physical and virtual credit cards, among other services. Back in October 2019, Galileo closed a $77 million Series A led by venture capital firm Accel with participation from Qualtrics Co-Founder & CEO Ryan Smith.
Last month Galileo achieved an annual transaction volume of $45 billion, which was up from the $26 billion they did in October 2019. Interestingly, Galileo has an existing working relationship with many of SoFi’s competitors, including Robinhood, Chime, Monzo, Revolut, Varo, and TransferWise.
The SoFi-Galileo Partnership
SoFi plans to leverage this partnership to power its ever-increasing range of finance products and create another revenue stream apart from consumer services. Plus, Galileo is expected to offer diversification and scale to SoFi’s existing infrastructure.
SoFi Money, the firm’s cash management account, has already integrated with Galileo’s payment platform. It includes several of Galileo’s leading accounts and events API functionalities.
Wilkes believes that both companies are offering products that their customers want:
“Distributing products through our enterprise-class API is the vision behind this combination. I think it’s very powerful. We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”
According to anonymous sources who are familiar with the deal, it comprised $75 million in cash, $250 million in seller financing debt, and $875 million in company stock. The deal began before the coronavirus pandemic caused the current global economic slowdown. However, both the companies were able to pull through because they were relatively stable and performing well.
SoFi CEO Noto released the following statement regarding the deal:
“SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right. The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation. Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation…”
What do you think of this deal? Are you worried about how the fintech wars are heating up with another significant exit in the space? Sound off in the comments below.
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