SoFi Stock Drops After News of Deal for Technisys

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Shares of SoFi Technologies plunged more than 8% Tuesday after the fintech said it is buying the banking software provider Technisys for $1.1 billion in stock.

Technisys shareholders will receive about 84 million shares of SoFi (ticker: SOFI) stock, which is less than 10% of SoFi’s fully diluted share count. The transaction is expected to close by the second quarter, a statement from SoFi said. 

“Technisys has built an attractive, fast-growth business with a unique and critical strategic technology that all leading financial services companies will need to keep pace with digital innovation,” Anthony Noto, SoFi’s CEO, said in a statement. 

Near midday, SoFi shares changed hands at $10.47, down 92 cents, or 8.1%. 

Founded in 1995, Technisys is a banking technology company that helps lenders go digital. The Miami fintech has 60 customers, including

HSBC

(HSBC), Rellevate, and TAB Bank. It employs about 1,300 people, and has raised $64 million in funding, including a $50 million C round from Riverwood Capital in 2019.

With the sale to SoFi, Technisys will operate as separate companies under the SoFi umbrella. Miguel Santos, Technisys co-founder and CEO, will continue to run the business. He will report to Derek White, CEO of Galileo, SoFi’s provider of fintech cloud services, an investor presentation said. 

Technisys is the latest acquisition for SoFi, an online personal-finance company that went public last year by merging with Social Capital Hedosophia Holdings Corp. V, a special-purpose acquisition company from venture capitalist Chamath Palihapitiya. Earlier this month, SoFi closed on an acquisition of Golden Pacific Bancorp, a Sacramento community bank with about $150 million in assets. In 2020, SoFi scooped up Galileo Financial Technologies, a provider of financial interface software, for $1.2 billion.

The acquisition of Technisys is expected to produce $500 million to $800 million of additional revenue through 2025. The deal is also seen generating about $75 to $85 million in cost savings from 2023 to 2025, and $60 to $70 million annually thereafter.

SoFi’s acquisition of Technisys is the second substantial piece of fintech deal action this week.

Apollo

Global Management (APO) on Monday entered into exclusive talks to buy

Worldline

‘s Terminals, Solutions and Service point-of-sale terminal business for 2.3 billion euros ($2.6 billion). 

The TSS business line provides hardware that lets consumers use their cellphones and payment cards to make purchases, according to The Wall Street Journal, which first reported the deal. 

Worldline, a French payments company, launched a strategic review of its payments terminal business in February 2020 after agreeing to buy rival Ingenico for 7.8 billion euros. By October 2021, Worldline had decided to divest the business and conducted a sales process over several months, said CEO Gilles Grapinet in a statement.  

The planned sale will allow Worldline to focus on its core business of digital payments, while also reducing its debt. 

By midday Tuesday, shares of Apollo were trading at $63.25, down 1.4%.

Apollo, a global asset manager, had $498 billion under management as of Dec. 31. It is paying 1.7 billion euros up front, as well as preferred shares that could reach 900 million euro in value depending on the future performance of TSS, the statement said.

The transaction still requires the parties involved to sign a final and definitive agreement, but it is slated to close in the second half of this year, the statement said. 

Write to Luisa Beltran at [email protected]