SoFi Technologies Inc. (NASDAQ:SOFI), the San Francisco-based fintech firm, is set to make its first foray into initial public offering (IPO) underwriting, marking an important step in its transition towards becoming a top-tier financial institution. The company will play a role in taking grocery delivery business Instacart Inc. public, possibly as early as next week.
The IPO could raise as much as $616 million, according to a filing on Monday. This move signifies SoFi's entry into a business sector known for its potential for substantial fees and reputational enhancement. The firm has previously been recognized as an online lender for college students and personal loan seekers and has assisted in launching five special purpose acquisition companies in recent years.
The underwriting of Instacart's IPO represents a significant stride for SoFi towards its broader ambition of being a full-service financial firm, said Morningstar analyst Michael Miller. He added that the listing would mark SoFi's "first real success" in this endeavor.
Instacart's listing could value the company at up to $9.3 billion. It plans to sell 14.1 million new shares at a range of $26 to $28 each, according to the Monday filing. The company, along with its bankers, will now begin courting investors and is considering pricing the listing on September 19.
SoFi's involvement may provide Instacart with greater access to the type of retail investors that fueled the meme-stock frenzy in 2021 and pushed shares of loss-making electric vehicle startups to high valuations. “SoFi's role highlights the growing importance of millennials who are attractive customers for both companies,” said Roth MKM analyst Rohit Kulkarni.
However, SoFi will face stiff competition as it attempts to build on its Instacart work and get in on more of the action as public-market fundraising picks up. That’s in part because the firm lacks the scale and experience of other potential underwriters, said Morningstar’s Miller.
The online bank will play a secondary role to lead underwriters Goldman Sachs (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) on Instacart’s listing and is expected to cater to its retail clients. “Working with SoFi will give them broader exposure with retail traders than if they had just used another traditional underwriter," Miller said.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.