US lender SoFi uses warchest to scoop up infrastructure giant Galileo for $1.2bn

By Oliver Smith on Wednesday 8 April 2020

Alternative Lending

A surprise acquisition during a time of economic crisis.

US lender SoFi uses warchest to scoop up infrastructure giant Galileo for $1.2bn
Image source: Anthony Noto/Flickr/TechCrunch.

Fintech infrastructure giant Galileo Financial Technologies has been acquired in a surprise $1.2bn deal with alternative lender SoFi.

Galileo is used by some of the world's leading fintechs like Robinhood, Monzo, Revolut and Transferwise for services like opening new accounts and issuing and processing bank cards.

SoFi says the cash and stock deal will see it continue to develop Galileo’s offering with new functionalities and services for its customers.

“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,” said SoFi CEO Anthony Noto.

Last year SoFi raised an additional $500m in a funding round led by the Qatar Investment Authority, which built on its previous $500m round in 2017.

“It makes sense for SoFi to diversify its business in the current conditions and getting into the infrastructure side of the market is a smart strategic move,” said Sam Maule, managing partner for North America at 11:FS.

“But it does also open up some interesting questions about potential conflicts of interest around those firms data given many are competitors.”

SoFi is also an existing customer of Galileo, which will likely lead other Galileo customers to wonder whether they will become second-class citizens.

In its announcement last night SoFi made it clear that Galileo will operate as an independent subsidiary, with Clay Wilkes staying on as CEO.

Interestingly Galileo will look to offer SoFi products and services to its customers.

SoFi started out as a student lender, but has grown into offering all kinds of lending products including mortgages and personal loans.

Recently it’s expanded into new areas like SoFi Invest, an investment platform, SoFi-branded exchange-traded funds (ETFs), and SoFi Money, a digital banking arm complete with checking and savings accounts.

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