Mortgage Lender Supported by SoftBank Better in SPAC by $ 7.7 Billion

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Pedestrians walk past SoftBank Group signs outside a store in Tokyo, Japan, November 29, 2018.

Kiyoshi Ota | Bloomberg | Getty Images

Digital mortgage lender Better.com announced Tuesday that it will debut in the market through a merger with Aurora Acquisition Corp., valuing Better at $ 7.7 billion.

Company, takes 15th place last year CNBC Disruptor 50 list, was valued at $ 6 billion after investment in April 2021 from SoftBank. At the time, The Wall Street Journal reported that the Japanese tech conglomerate had agreed to transfer all of its voting rights to co-founder and CEO Vishal Garg “as a sign of its desire” to support the company.

The New York-based company was founded in 2016 by Garg, a former analyst with Morgan Stanleyafter a deal to buy a house for his family fell through. The cash-only buyer was able to beat his traditional mortgage lender in terms of timing, and it was then that Garg decided he needed to The best way… He used the first installment he set aside to start Better.

Better platform moves mortgage process completely online, giving customers the ability to download and sign documents, and claims to reduce closing times from the industry average of 42 days to 21 days. Garg says the digital approach is also helping to reduce bias against minorities when applying for mortgages. The company previously cited research from the National Bureau of Economic Research showing that personal lenders reject minority applicants about 6% more often than comparable non-minority applicants, and also charge minority applicants more for their mortgages.

“We are delighted to partner with Better, an emerging market leader with a proven leadership team led by Vishal, an attractive business model and a highly scalable digital platform,” Aurora Chairman Thor Bjorgolfsson said in a press release.

Amid the refinancing hype fueled by the pandemic, Better provided nearly $ 25 billion in loans last year and $ 14 billion in the first quarter of 2021 alone, according to the magazine. In addition, last year the company received not only $ 800 million in revenue, but also profits, although its growth has not been without some disagreements

The SPAC deal includes a $ 1.5 billion private equity investment (PIPE) led by SoftBank. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the ultimate market debut possible.

“Everyone deserves a home, and we’re not going to stop until we give everyone the opportunity to not only dream of a home, but to have one,” Garg said in a deal announcement.

In the first quarter of 2021, there were over 300 SPAC transactions and the housing and mortgage market was very hot, but SPAC yields fell sharply throughout the year.

Own CNBC SPAC 50 Index, which tracks the 50 largest pre-merger deals in the US, which rose sharply earlier this year but fell sharply and are now downward from last year. IN CNBC SPAC Aftermarket Index, which consists of the largest SPACs that entered the market and announced a targeted acquisition, has lost its earnings since the beginning of the year. The CNBC SPAC Aftermarket Index declined 6.98% over the past week to Monday.

The deal is expected to close in the fourth quarter.

KEEP FOR UPDATES: 2021 year CNBC Disruptor 50 The list will be published live and online on May 25th.

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