Digital personal finance company SoFi Technologies, Inc. (Nasdaq: SOFI) will acquire Technisys, a “leading cloud-native, digital multi-product core banking platform,” in a deal that will help SoFi to add to its digital offerings to “provide best-of-breed products as a one-stop-shop financial services platform.”
Pursuant to the agreement, Technisys shareholders will receive a consideration of approximately 84 million shares of SoFi common stock, which is “less than 10% of SoFi’s fully diluted share count as of September 30, 2021,” the consideration has an aggregate value of approximately $1.1 billion based on the volume weighted average price.
Accordingly, the proposed acquisition of Technisys will add “strategic technology and business for SoFi” and for Galileo, a digital payment platform that SoFi acquired in Spring 2020 for $1.2 billion. The combined technology is expected to be “the only end-to-end vertically integrated banking technology stack” and will help SoFi create a multi-product, digital banking platform offering “best-of-breed” financial products and offerings.
“Technisys has built an attractive, fast-growth business with a unique and critical strategic technology that all leading financial services companies will need in order to keep pace with digital innovation,” Anthony Noto, CEO of SoFi, said in a press release. “The acquisition of Technisys is an essential building block in delivering on our member-centric, digital one-stop-shop experience for SoFi members and our partners through Galileo, our provider of fintech cloud services.”
As noted in the filings, Technisys with Galileo are anticipated to support products, including checking, savings, deposits, lending and credit cards, as well as future products, via APIs. This will allegedly allow the combined company to serve current partners as well as established banks, fintech companies, and others in the financial services industry.
“We are thrilled to bring Technisys technology, customer base, and expertise to the larger SoFi Technologies platform,” Miguel Santos, CEO of Technisys, said in a statement. “We are confident that together, we can offer a best-in-class financial experience for traditional and non-traditional financial services players alike at a greater velocity than ever before.”
The acquisition will help accelerate SoFi’s growth and will add a cumulative $500-$800 million through the end of 2025, inclusive of revenue and cost savings, which as estimated as $75 -$85 million cumulatively from 2023 to 2025 and $60 to $70 million each year afterwards. According to the filing, Technisys’s revenue for 2021 is estimated to be $70 million.
The deal, announced February 22, is expected to close in Q2 2022, subject to customary closing conditions.
Upon closing, Technisys will operate as an independent subsidiary of SoFi and will be part of its technology platform offering and Miguel Santos will continue as the CEO of Technisys.
Technisys is represented by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP. SoFi is represented by Wachtell, Lipton, Rosen & Katz and its financial advisor is Allen & Company LLC.
Before the announcement, SoFi’s stock was valued at $11.39 on February 18; when it was announced on February 22, its stock was valued at $10.26. As of the time of this writing on March 1, it was valued at $11.46.