Fintech M&A
February 22, 2022
5 minutes read

Fintech Giant SoFi To Buy Banking Platform Technisys For $1.1B

There’s a big new deal in the fintech world. SoFi, the publicly-traded fintech giant, has struck a deal to buy…

There’s a big new deal in the fintech world. SoFi, the publicly-traded fintech giant, has struck a deal to buy Technisys, a company that makes software for banking operations. SoFi will pay roughly $1.1bn in shares for Technisys, marking a good exit for a company that raised just about $60mn from VCs.

Technisys provides digital banking technology and software used by financial institutions. The company was founded back in 1999 in Argentina but relocated to Miami, USA, in 2019 after raising $50mn to expand into North America. Most of its customers are in Latin America, although it has recently built a significant customer base in the US and Canada.

SoFi buying Technisys is another step in transforming from a one-time lender into a full-fledged digital bank. The fintech giant started in 2011 as an alternative student loan provider but has since morphed into a full-grown personal finance company offering other services, including personal and home loans, investing, insurance, and credit cards.

SoFi’s next plan is transforming into a one-stop digital bank. To achieve that, it recently bought Golden Pacific Corp, a California-based community bank, and obtained a national bank charter. Now, it’s buying Technisys, which provides back-end software for banks. SoFi is essentially becoming a one-stop shop for digital banking services, both to individuals and other banks and fintech companies.

SoFi agreed to hand over 84 million shares to Technisys’ shareholders, worth $1.1bn based on their volume-weighted average price 20 days leading up to the agreement, or about 10% of SoFi’s outstanding shares. However, it appears that investors weren’t happy with such significant dilution; SoFi’s shares fell nearly 10% on Tuesday after announcing the acquisition.

In a statement to investors, SoFi said it expects Technisys to add between $500mn-$800mn in revenue through year-end 2025.

SoFi expects the acquisition to close in this year’s second quarter. Technisys will operate as an independent SoFi subsidiary once the deal closes, according to a press statement.

Technisys is SoFi’s second-biggest acquisition since inception. The first is Galileo, a banking API platform that SoFi paid $1.2bn in cash and shares to buy in 2020. Technisys is, however, SoFi’s biggest acquisition since going public through a merger with a special-purpose acquisition company (SPAC) last year June.

SoFi’s transformation into a one-stop financial shop is the brainchild of CEO Anthony Noto. He took over the leadership role in 2018 from SoFi co-founder Mike Cagney under tumultuous circumstances. Before joining SoFi, Noto was Chief Operating Officer (COO) at social media giant Twitter.