Social Finance (known as SoFi), the online lender focussed on student loans, has opened a new hedge fund called the SoFi Credit Opportunities Fund, which will buy SoFi’s own loans as well as some from its competitors. The fund, to be run by former Goldman Sachs banker and venture capitalist David Sacks, is expected to raise about $200m (£150m) in capital over three years, according to people familiar with it. The sector lacks the deposits needed to fund its loans like traditional banks, so it relies on being able to sell the loans to investors to free up capital to make new ones.” The new hedge fund has “a real chance to solve the balance-sheet problems facing the industry," according to SoFi Chief Executive Mike Cagney, and will allow SoFi to support the market for its loans without needing to raise cash by selling shares.
Social Finance (known as SoFi), the online lender focussed on student loans, has opened a new hedge fund called the SoFi Credit Opportunities Fund, which will buy SoFi’s own loans as well as some from its competitors. According to the WSJ, the move “is an attempt to get around waning investor interest that is threatening online lenders’ growth. The sector lacks the deposits needed to fund its loans like traditional banks, so it relies on being able to sell the loans to investors to free up capital to make new ones.” The new hedge fund has “a real chance to solve the balance-sheet problems facing the industry," according to SoFi Chief Executive Mike Cagney, and will allow SoFi to support the market for its loans without needing to raise cash by selling shares.