SoFi Prices $1.1B Convertible Senior Notes Offering

Online personal finance company SoFi Technologies, Inc. (SOFI) revealed to have priced its private offering of 0.00% convertible senior unsecured notes due 2026 and has raised the principal amount to $1.1 billion. The company plans to settle the issuance and sale of the notes by October 4, 2021.

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“The initial purchasers have also been offered an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional $100 million aggregate principal amount of notes,” the company said.

The noteholders will have the option to convert notes on the business day immediately preceding April 15, 2026, under certain circumstances and during certain periods. The notes can also be converted on or after April 15, 2026, until the close of business on the second scheduled trading day immediately preceding October 15, 2026. (See SoFi stock chart on TipRanks)

The initial conversion rate will be 44.6150 shares of SoFi’s common stock per $1,000 principal amount of notes. The conversion settlement may be made in cash, shares of SoFi’s common stock or a combination of cash and stock.

The net proceeds from the offering are expected to be about $1.078 billion. SoFi plans to use $104.3 million in funding the cost of entering into the capped call transactions. The remaining amount, along with the available cash balance, will be used for general corporate purposes and to pay fees, costs and expenses of the offering.

SoFi also announced that it entered into privately negotiated capped call transactions with certain financial institutions to cover the number of shares of SoFi’s common stock underlying the notes.

On September 22, Jefferies analyst John Hecht initiated coverage on SoFi with a Buy rating and a price target of $25 (56.2% upside potential from current level).

Hecht noted, “An industry leader in the rapidly expanding neobank space, SoFi boasts an exhaustive consumer finance product suite, a robust digital platform, and omni-channel execution. We believe that “Flywheel”, SoFi’s synergistic business model, will continue to drive significant user growth, product adoption, and margin expansion.”

Consensus among analysts is a Strong Buy based on 4 Buys and 1 Hold. The average SoFi price target stands at $24.50 and implies upside potential of 53% from current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on SoFi with 18.4% of investors on TipRanks increasing their exposure to SOFI stock over the past 30 days.