US-Israeli AI fintech company Pagaya is going public via a SPAC merger with EJF Acquisition Corp (EJFA), according to a statement. The combined company will be valued at around US$8.5 billion.
The merger is expected to close in early 2022, depending on shareholder approvals and other closing conditions. Existing Pagaya equity holders will control about 94% of the merged company.
The deal involves US$288 million from EJFA’s cash in trust. It also includes US$200 million from a fully committed private placement in public equity (PIPE) from EJFA-associated entities. This will close along with the merger. Additional financing transactions may be considered, the statement said.
The deal was advised by UBS Investment Bank along with Barclays for EJFA, and J.P. Morgan Securities exclusively for Pagaya.
Meanwhile, Manny Friedman, Chairperson, EJFA, and Co-CEO and Co-CIO of EJF Capital, will be joining Pagaya’s board.
Leadership at Pagaya will continue to lead the merged business
Founded in 2016, Pagaya’s automated proprietary AI network helps banks, fintechs, merchants, lenders and B2C businesses manage their money and transform legacy underwriting systems. The company aims to enable financial services providers to use AI for better client outcomes, by integrating with Pagaya’s API.
The company was founded by Pagaya CEO Gal Krubiner, CTO Avital Pardo, and CRO Yahav Yulzari, who will continue to lead the merged company.
It currently serves businesses in markets such as unsecured consumer, auto, credit card, point-of-sale, and real estate. The fintech company has plans to expand into credit solutions for mortgages and insurance related products, and other data-rich markets as well, it said in the statement.
Pagaya has processed over 17 million applications in the year ending June 2021, the company added in the statement. This translated to a new application being analysed every second. It reached US$4.7 billion in annualised network volume in Q2 2021. Annualised revenues for the quarter stood at US$381 million, with an annualised network volume growth of 198%.
The company has raised a total of US$221.3 million in venture capital and debt funding, including US$102 million Series D led by Singapore’s sovereign wealth fund GIC last year.
“This is an important milestone not just for us, but also for our partners, their customers and the broader financial services industry. Legacy systems are historically fractured and inefficient. We identified a significant opportunity to address the inefficiencies of the current system by constructing a network powered by our proprietary A.I. technology.
Our combination with EJFA allows Pagaya to combine our expertise with EJF’s deep financial experience. Together, we can continue to expand a leading artificial intelligence network to help our partners grow their businesses and better serve their customers,”
Krubiner said about the deal.
Featured image credit: Pagaya