SoFi, an online personal finance platform, announced that it has agreed to acquire banking tech firm Galileo, which helps other financial ventures including Robinhood, Revolt, and Chime. The acquisition will cost $1.2 billion, consisting of cash and stock. The deal consists of $875 million in SoFi shares, $75 million in cash and $250 million in debt financing.
Galileo’s “digital payments platform enables critical checking and saving account-like functionality via its powerful open APIs, providing companies with an easy way to create sophisticated consumer and B2B financial services.” Other fintech companies rely on Galileo for their operations, including competitors Robinhood and Chime. Operations affected include “account setup, funding, direct deposit, early paycheck direct deposit, and bill pay.” SoFi added that Galileo ‘s addition will allow it to “[round] out its best-in-class technology system” and together they will “work together to accelerate the pace of technology innovation to offer Galileo’s partners, and subsequently consumers.”
“SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right,” SoFi CEO Anthony Noto said. “The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation. Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation, making those products and services available to both current and future partners. While we march forward on our mission to help people achieve financial independence through our own direct efforts, with Galileo, we can enable a broader ecosystem of companies to join us in helping the world achieve financial independence.”
“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services,” Galileo CEO Clay Wilkes said. “These are products that many of our leading fintech clients are asking for. Distributing products through our enterprise class API is the vision behind this combination. I think it’s very powerful. We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”
Galileo will operate as an independent subsidiary of SoFi and Wilkes will remain CEO of Galileo. The acquisition announcement comes after Galileo suffered a large technology meltdown in 2019, causing some of its clients to lose banking services for a day. SoFi also had difficulty expanding its business; the foundation of the company is refinancing student loans and it tried to move into other services such as loans, cryptocurrency and consumer banking.
The acquisition must be approved by regulators and is subject to standard closing conditions. SoFi’s financial advisors were Goldman Sachs & Co. LLC and Citigroup and its legal advisor was WilmerHale. Galileo’s financial advisor was Qatalyst Partners and its legal advisor was Dorsey & Whitney.