This won’t be the year that millennial-focused online lender SoFi debuts on a stock exchange under the ticker symbol ‘SOFI’. Instead, it will be another year in which relatively new SoFi CEO Anthony Noto lays the groundwork for a possible IPO down the line.
“An IPO is not a priority at this point,” Noto told Yahoo Finance. SoFi marks Noto’s first CEO job. He took over for ousted SoFi founder Mike Cagney in February 2018. But there is no question Noto has the right experience to bring SoFi public at some point soon.
Noto is a former tech analyst and investment banker at Goldman Sachs. He played a key role in Twitter’s IPO while at Goldman — he then joined Jack Dorsey at the company as chief operating officer for an almost four-year stint.
SoFi focus is on quality
SoFi offers a range of loan products online, including home loans, personal loans, student loans and refinancing.
Noto has spent the past year or so at SoFi primarily focused on two areas. First, cleaning up SoFi’s loan book (which holds billions of dollars in loans) that perhaps got too risky under Cagney. “We focused more on loan quality in 2018,” said Noto. While that came at the expense of top line growth, Noto believes it was the right thing to do for the health of the overall business.
Loan quality will also be an important area among investors should SoFi hit the road for an IPO.
Even with the focus being on loan quality over quantity, SoFi is still a top 10 asset-backed securities provider in the U.S., Noto said. He projects SoFi’s mortgage lending business to double this year. He expects the company’s top line — estimated in the hundreds of millions of dollars annually — to grow 40% in 2019.
Noto declined to comment on whether the privately held company is profitable.
“Our lending business has never been healthier,” Noto said.
The company has also begun to branch out into other financial services products such as SoFi Money (a high-interest earning checking account-like product) and SoFi Invest (a no fees product that allows you to buy stocks and ETFs).
Noto said these newer products are in customer acquisition mode with less of a near-term emphasis on profits.
Another area garnering Noto’s attention has been improving SoFi’s culture. Noto — a former U.S. Army captain — stepped into a firestorm at SoFi. The company’s founder Cagney was ousted in the summer of 2017 amid claims of widespread internal harassment of female workers.
“SoFi’s culture needed to be improved,” Noto acknowledged. Since taking the top spot, Noto has brought in a host of new executives and worked to establish guiding cultural principles for the company.
Indeed a toxic culture at another Silicon Valley-based tech upstart is the last thing prospective investors would want to lay eyes on.
SoFi is ripe for an IPO
SoFi is a tech unicorn reportedly valued around $4.5 billion. It has all the tell-tale signs of a company with a destiny to be on public markets: a CEO with extensive deal-making experience; a clever, new-economy business model; and what looks to be surging top line growth.
If Noto could keep the culture on track, SoFi shouldn’t have a problem being embraced on a roadshow. Or, being embraced by an acquirer before that roadshow.
Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi