Digital Mortgage Lender Announces Softbank Backed SPAC and $ 7 Billion Appraisal

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Digital supported by Softbank mortgage lender Better announced yesterday its intention to join a SPAC with The Aurora Acquisition Corp., in order to make Better public. The deal is expected to close at the end of 2021. This merger gives Better an implied equity value of around $ 6.9 billion and an after-the-money equity value of around $ 7.7 billion, as stated in the ad.

A subsidiary of SoftBank Group Corp., SB Management Limited, will provide $ 1.5 billion in private equity investments (PIPE) and Novator Capital, the sponsor of Aurora Corp, will invest $ 200 million using the same method. Activant Capital, an existing investor in Better, will also participate in PIPE for an undisclosed amount.

Just a month ago, Softbank invested $ 500 million in Better, for a valuation of $ 6 billion.

Better’s financial strength is undoubtedly a direct consequence of its success due to the dual influence of the covid pandemic of low and sustained interest rates over the past year and the need for consumers to have power. conclude transactions without having to meet in person. Last March, when the impact of the pandemic began, Better had a 200% increase in applications compared to February and a total of over $ 1 billion in loans closed during the month, which is more than the four-year company closed for 2017 and 2018 combined. In all of 2020, they funded $ 24.2 billion in volume, according to the press release announcing the PSPC.

Better, what has not been without some controversy, was founded in 2016 by Vishal Garg who was frustrated with the mortgage application process after losing to a cash buyer when he made an offer on a home. He designed the fully digital multi-product platform to reduce costs and speed up the process for buyers. The company’s marketing materials indicate that their online process allows qualified customers to close in as little as two weeks.

The biggest benefit of this news is the scale of future demand for real estate transactions to take place in a fully digital way. The pandemic has shown us that the market can continue with a limited need for in-person contact and mortgage lenders of all sizes will need to improve their digital platforms if they are to remain competitive. The news from Better is just the start of a much larger trend.

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