The online finance startup SoFi is bucking Wall Street tradition by giving amateur investors an easier way to purchase shares in companies as they go public. As CNBC reported on Friday (March 26), these shares are traditionally reserved for institutional investors or people who boast a high net-worth, leaving retail investors paying substantially higher prices once those shares actually begin trading.
“Main Street will have access to investing 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 diversified portfolios.”
SoFi will underwrite these deals, working with companies to determine share price, purchasing securities from the issuer and selling them back to particular investors. While brokerage firms typically get a portion of IPO shares during that process, they tend not to offer them to “the everyday investor,” CNBC noted.
SoFi clients with at least $3,000 in account value will be able to reserve the number of shares they want, receiving an alert from the app when it’s time to confirm their order. Robinhood is apparently working on a similar platform to offer IPO access.
According to CNBC, SoFi itself is set to go public with an $8.6 billion merger with Social Capital Hedosophia Corp, run by venture capital investor Chamath Palihapitiya. Founded in 2011, the company initially focused on student loan refinancing for millennials and now offers stock and cryptocurrency trading, loans 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 bank platform.
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