Home Loan Start-up Better to Go Public in SPAC Merger
< img src=" https://images.wsj.net/im-336426/social" class=" ff-og-image-inserted"/ > Startup home mortgage lender Much better prepares to go public by merging with a special-purpose acquisition business, according to people familiar with the matter.
Much better Holdco Inc. prepares to merge with Aurora Acquisition Corp.. AURC 5.00%, a SPAC sponsored by investment company Novator Capital, at evaluation of roughly $7 billion pre-money, the people stated. The transaction might be completed today.
SoftBank Group Corp. 9984 -5.64%, which just recently invested $500 million in Better, could put in another $1.3 billion through a PIPE, or private financial investment in public equity, a typical feature of SPAC mergers. (Much better might position $400 million of that with other financiers.) The remaining $200 million of the $1.5 billion PIPE is to come from Aurora, whose sponsor is the financial investment vehicle of Icelandic billionaire Thor Bjorgolfsson.
There has been a surge recently in deal activity involving SPACs, which raise money in a preliminary public offering and then try to find an organization to combine with, as personal business seek a more structured route to the general public markets than through a traditional listing.
Established in New York in 2014, Better provides mortgage for customers through its website and banks such as Ally Financial Inc.. Better had more than $850 million in revenue in 2020 and more than $200 million in net earnings, according to individuals familiar with the business’s financial resources.
Like other home loan providers, Better rode a wave of homebuying and refinancing activity as rates of interest reached historical lows, extending $25 billion in loans in 2020 and $14 billion in the first quarter of 2021 alone.
The company formerly raised money from financiers consisting of Goldman Sachs Group Inc., Kleiner Perkins Caufield & & Byers and Health Care of Ontario Pension. It was last valued at about $6 billion when SoftBank bought shares from the business’s existing shareholders previously this year, a sharp dive from the $4 billion at which it raised cash in November.
Last year, brisk homebuying and refinancing activity established the home loan market for one of its finest years ever. That triggered a wave of IPOs and other deal making, with companies like Quicken Loans moms and dad Rocket Cos. going public and United Wholesale Home loan choosing to combine with a SPAC. But as home loan rates ticked up earlier this year, IPO activity cooled.
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