The online student lender Social Finance has agreed to acquire payments technology provider Galileo Financial Technologies for $1.2 billion in cash and stock, the companies said on Tuesday.
Galileo’s platform provides technology to allow companies to easily offer a range of financial services to consumers and businesses, including checking and savings accounts, direct deposits, ACH transfers and bill payments.
San Francisco-based SoFi already uses Galileo’s technology for its cash management account service SoFi Money, as well as some of its other offerings, the company said.
The companies will work together to offer SoFi’s products to Galileo’s partners, and to develop new financial technology services, the companies said. Additionally, the companies stated that Galileo will continue to operate as an independent subsidiary of SoFi Inc, with current Chief Executive Clay Wilkes at the helm.
The SoFi deal comes amid a dearth of mergers and acquisitions due to the economic effects of the coronavirus pandemic. Global mergers and acquisitions activity plunged 28% in the first quarter to its lowest level since 2016, according to Refinitiv data.
The move also underscores a significant push by SoFi beyond its core student lending offering. This could help it diversify its revenue stream at a time when lenders could see a rise in defaults, due to the economic impact of coronavirus.
SoFi, one of most well-funded FinTech companies in the United States, grew quickly following the Great Recession by refinancing at cheaper rates student loans for strapped-but-promising graduates. It has since expanded its offering to “members” beyond lending to include investment management and cash management.
The company, led by former Twitter Inc CFO Anthony Noto, said the deal will help it extend the reach of its products to other Galileo partners in the US and overseas, helping its business scale and diversify.
“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services,” said Wilkes, the Chief Executive of Galileo. “These are products that many of our leading FinTech clients are asking for.”
The deal is subject to regulatory approvals and other closing conditions, the companies said.
Via our content partner at Reuters. Reporting by Anna Irrera; Editing by Nick Zieminski.