Mortgage Startup Better to Go Public in a $7.7 Billion SPAC Business Deal

By Mariliana Fotopoulou Tuesday, May 11, 2021

Better Holdco Inc., a fast-growing mortgage startup company, is reportedly planning to go public via a $7.7 billion business deal with a special purpose acquisition company (SPAC).

Real estate broker discussing contracts.

Approaching $1 Billion in Annual Revenues

The mortgage startup company Better is set to merge with SPAC Aurora Acquisition Corp., backed by investment company Novator Capital. In addition, Japanese investing company SoftBank Group will invest $1.5 billion through private investment in public equity (PIPE), with Aurora investing a further $200 million.

“This transaction provides investment capital to accelerate Better’s growth and support our mission to make homeownership simpler, faster, more affordable and more accessible for all Americans, and eventually everyone else,” Better’s founder and CEO Vishal Garg said.

The number of SPAC deals has substantially risen lately as private companies have been opting for a more streamlined way to go public compared to traditional options, like the initial public offering (IPO).

Better is a mortgage startup that offers services through its website, as well as banks like Ally Financial. The startup company garnered more than $850 million in business sales last year and over $200 million in net profits.

The startup leveraged the spike in home buying and refinancing activity last year as interest rates plummeted to all-time lows, extending $25 billion in loans in 2020 and $14 billion in Q1 2021 alone.

“We are pleased to partner with Better, an emerging market leader with proven executive management led by Vishal, an attractive business model and a highly scalable digital platform,” said Thor Björgólfsson, Chairman of Aurora Acquisition Corp.

Better previously secured funds from other business investors, including Goldman Sachs, Kleiner Perkins Caufield & Byers, and Healthcare of Ontario Pension Plan. The startup company hit $6 billion in business valuation after SoftBank invested in the company earlier in 2021, just a few months after it had reached a business valuation of $4 billion in November 2020.

“We firmly believe that Better will create substantial long term value for shareholders and will leverage its significant technology to lead the industry into the future,” commented Prabhu Narasimhan, the chief investment officer of Aurora, who will become a member of the board of directors at the new company.

The last year is seen as one of the best-ever years for the mortgage industry, giving rise to a wave of IPOs and SPAC deals. Quicken Loans’s parent company Rocket Cos. made its public debut last year, as well as United Wholesale Mortgage which also merged with a SPAC business. However, the number of IPO deals in the industry has somewhat dropped this year as mortgage rates spiked.

Better was founded in 2016 in New York as a digital-first homeownership company, providing mortgage, real estate, title, and homeowner insurance services. Between 2016 and 2020, the startup spent $30.9 billion in home loans. The startup company secured $400 million in equity capital since its launch.

Summary

Mortgage lender startup company Better Holdco has announced plans to go public through a SPAC merger that values that company at $7.7 billion. Japanese SoftBank is the biggest single investor in the transaction after committing $1.5 billion through its business arm SB Management Limited.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

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