SoFi gives amateur investors early access to an IPO
The online finance startup SoFi goes against Wall Street tradition by providing an easier way for amateur investors to buy shares of companies as they go public. As CNBC reported On Friday, March 26, these stocks are traditionally reserved for institutional investors or people who boast of high net worth, leaving retail investors to pay significantly higher prices once those stocks actually start trading.
“Main Street will have access to investment in a way they wouldn’t have before,” SoFi CEO Anthony Noto said in a phone interview. “It gives more differentiation and more access so people can build diverse portfolios.”
SoFi will enter into these agreements, working with companies to determine the share price, buying securities from the issuer and selling them back to retail investors. While brokerage firms typically get a portion of the IPO stock during this process, they tend not to offer them to the “everyday investor,” CNBC noted.
SoFi customers with an account value of at least $ 3,000 will be able to reserve as many shares as they want, receiving an alert from the app when it’s time to confirm their order. Robin Hood apparently working on a similar platform to offer IPO access.
According to CNBC, SoFi itself is on the verge of going public with an $ 8.6 billion merger with Social Capital Hedosophia Corp, led by venture capitalist Chamath Palihapitiya. Founded in 2011, the company initially focused on refinancing student loans for millennials and now offers stock and cryptocurrency trading, lending, and wealth management services.
PYMTS reported earlier this month that SoFi had acquired Golden Pacific Bank in California for $ 22.3 million, with Noto saying the purchase would give SoFi a national banking platform.