Will SoFi's $1.1B Acquisition of Technisys Pay Off?
The one-stop-shop financial services company SoFi (NASDAQ: SOFI) made a splash coming back from the holiday weekend by announcing that it had agreed to acquire the core processing company Technisys in an all-stock deal valued at $1.1 billion. Core processing systems are the back-end infrastructure that enables banks to carry out a broad array of their daily operations, such as managing deposits, loans, and other types of transactions. Not only does the price amount to roughly 13% of SoFi's current market cap, but it rivals its previous acquisition of Galileo, which SoFi $1.2 billion. Galileo has been a big selling point among investors. Will SoFi's acquisition of Technisys prove to be the same? Let's take a look.
When many people see SoFi, they see a digital banking app that offers different kinds of lending and depository products and investing capabilities all packed into one. But SoFi also has a technology platform division, which houses Galileo. Galileo looks a lot different from SoFi's other offerings. The company provides back-end infrastructure that powers the operations of many fintech companies and neobanks. Specifically, Galileo helps give fintechs -- many of which don't have bank charters and primarily work on the front-end user experience -- the ability to process payments like those for debit card transactions and traditional direct ACH transactions.
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Source Fool.com
