BENGALURU • United States-Israeli fintech Pagaya has agreed to go public through a merger with special purpose acquisition company (Spac) EJF Acquisition Corp in a deal with an enterprise value of US$8.5 billion (S$11.4 billion).
The deal on Wednesday will result in gross proceeds of US$288 million from cash held in the blank cheque company's trust and a US$200 million private investment in public equity from entities affiliated with EJF Acquisition.
Shares of EJF Acquisition rose 1.8 per cent to US$9.86 in pre-market trade.
Founded in 2016, Pagaya manages assets for banks, insurance companies, pensions funds, asset managers and sovereign wealth funds using artificial intelligence.
The fintech, led by co-founder and former UBS executive Gal Krubiner, earns a majority of its revenue from fees generated by institutional investors making purchases of products enabled by its artificial intelligence network.
Last year, it raised US$102 million in a private funding round led by Singapore sovereign wealth fund GIC. Other investors in the round included insurer Aflac's Aflac Global Ventures, Bank Hapoalim's Poalim Capital Markets, Viola and Mr Harvey Golub - the former chief executive of American Express.
Existing investors of Pagaya are expected to retain an ownership stake of about 94 per cent in the combined company.
The deal comes as activity slows in the blank-cheque Spac sector amid growing investor caution and deepening regulatory scrutiny.
Spacs are publicly listed investment vehicles with no business operations. They are created with the purpose of merging with a private company at a later date, to take it public by sidestepping a traditional initial public offering.
The merger has been unanimously approved by the board of both companies and is expected to close early next year.
UBS Investment Bank and Barclays served as financial and capital markets adviser to EJF Acquisition, while JP Morgan Securities exclusively advised Pagaya on the deal.