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SoFi saw its stock slide after it announced that it was buying Latin America-based banking software provider Technisys.
SoFi Technologies Inc (NASDAQ: SOFI) stock price dropped more than 8% Tuesday after the American online personal finance company announced plans to buy Technisys. According to SoFi, the cost for acquiring the banking software provider platform is $1.1 billion, paid in stock.
SoFi’s stock is currently trading at around $10.47 after retracing by 92 cents following the acquisition announcement. The fintech company stated that it expects the deal to generate up to $800 in additional revenue through 2025. Furthermore, SoFi added that it projects up to $85 million in cost savings for the same period. It also expects up to $60 to $70 million annually after that.
Insight Into the All-Stock Acquisition Deal between SoFi & Technisys
Pursuant to the arrangement, the shareholders at Technisys will receive around 84 million shares of SoFi stock. This amount is less than 10% of SoFi’s fully diluted share count. Also, SoFi says that it expects the transaction to conclude by the second quarter.
SoFi’s chief executive officer Anthony Noto weighed in on the development. Noto generally commended Technisys’ track record and the groundbreaking technology it has helped institute in the space. In his own words:
“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…Under the leadership of co-founder and CEO, Miguel Santos, Technisys has emerged as a proven leader in Gen 3 multi-product banking core technology.”
In addition, the SoFi CEO also expressed “excitement” at channeling the Latin America-based company’s technology to aid SoFi’s cause. As he put it:
“We are excited to bring their technology offering under the SoFi Technologies umbrella and deliver it to hundreds of millions of customers worldwide.”
Pursuant to the terms of the deal, Technisys will operate as a separate company under SoFi’s auspices. Furthermore, Technisys’ co-founder and chief executive Miguel Santos will continue to helm the banking software provider. He will now report to Derek White, CEO of Galileo, which is SoFi’s provider of fintech cloud services. The personal finance company acquired Galileo Financial Technologies back in 2020 for $1.2 billion.
SoFi Likely Looking to Become a Major Player in the Banking Sector
SoFi has been on an acquisition spree since it went public last year via a merger with Social Capital Hedosophia Holdings Corp V, through a special purpose acquisition vehicle (SPAC) created by venture capitalist Chamath Palihapitiya. Upon conclusion of the SPAC, SoFi set its sights on Sacramento community bank Golden Pacific Bancorp, which has about $150 million in assets. The fintech closed on the deal earlier this month.
SoFi’s acquisition of Technisys is the latest of the acquisitions and the largest so far. With all its acquisition pieces working in synergy, SoFi now has its own core banking platform, and the supporting back-end technology. According to Peter Rudegeair of the Wall Street Journal, this technology can be used to execute a range of functions. They include powering mobile-banking apps, and opening accounts. Furthermore, it can also facilitate keeping track of customer deposits.