Mortgage lender Better is looking for a big pay day.
The company plans to go public via a merger with Aurora Acquisition Corp., a special-purpose acquisition company backed by the investment firm Novator Capital, the Wall Street Journal reported. The deal would give Better a pre-money valuation of $7 billion.
The investment giant Softbank put $500 million into Better, which was previously valued at around $6 billion. Aurora — whose leadership team includes Novatar’s CEO Thor Björgólfsson and Net-a-Porter co-founder Arnaud Massenet — could also put in $200 million.
Mortgage lenders have seen a huge boost during the pandemic thanks to low rates and a hot housing market. Last year, Better made over $850 million in revenue and more than $200 million in net profits, the publication reported.
But that activity may be slowing down. The 30-year mortgage rate is starting to rise and competition is growing, narrowing profit margins for lenders.
SPACs have also seen an explosion in popularity in the past year, raising $83 billion across 248 blank-check firms. In the proptech space, a number of companies — including Sonder, SmartRent and Latch — have launched IPOs by merging with blank-check companies.
[WSJ] — Keith Larsen