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SoFi Is Buying Payments Company Galileo For $1.2 Billion – Forbes


SoFi, the San Francisco fintech company whose products range from student loans to cryptocurrency trading, is buying Salt Lake City payments firm Galileo for $1.2 billion in stock and cash. Galileo powers payments for several big-name fintechs, including stock trading app Robinhood, money transfer service TransferWise and digital bank Chime. 

Galileo had annualized revenue near $100 million at the end of last year, according to a person familiar with the matter. Using APIs, or code that clients can access and customize, it helps businesses launch financial services including debit cards and bank accounts. Although Galileo launched in 2001, it didn’t bring on its first major round of venture capital until October 2019, when it raised $77 million from investors like Accel. The $1.2 billion price is the same valuation the company received in October, a person familiar with the deal says, and SoFi is paying for it with $875 million in equity, $250 million in debt and $75 million in cash. 

The acquisition shows SoFi’s ambition to become a highly diversified financial services business. After launching online-only student loans in 2011, it later expanded into mortgages, personal loans, stock trading services, crypto trading, ETFs and checking accounts. Last fall, it reportedly spent $400 million to buy the naming rights to the Los Angeles Rams’ and Chargers’ football stadium for 20 years. Since its 2011 founding, SoFi has raised $2.3 billion in venture capital from investors like Softbank. Last year, it brought in more than $400 million in revenue, according to a person familiar with the company’s finances, and had $2 billion in cash on its balance sheet. 

By buying Galileo, SoFi, led by CEO Anthony Noto, creates a new revenue stream of white-labeled financial services. It can help other companies launch financial products, and Galileo will remain an independent subsidiary with its founder Clay Wilkes, 59, staying on as CEO. With this corporate structure, SoFi aims to encourage other fintechs to buy Galileo’s services even though SoFi might be directly competing with them through its own SoFi Invest and SoFi Money apps, which offer stock trading and checking-account-like features.

The timing for the deal is a surprise given the economic downturn caused by the coronavirus. Investors say many funding deals are on hold given the uncertain environment. Conversations between SoFi and Galileo began well before the outbreak, and this announcement indicates that fintech startup valuations haven’t yet been pushed down significantly by the recession. We may not start seeing that happen until this summer or fall, one fintech executive says. 

Broadly, the recession has put fintech lenders in a risky spot. SoFi may be better positioned than others because it caters to more affluent customers who might be less likely to default on loans. In a recent report from bond rating agency Kroll, the average customer who took out a SoFi personal loan had income of $165,563 and a high FICO score of 753.



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