SoFi Technologies Inc. (SOFI.US) is set to acquire the British fintech company PrimaryBid, which gained prominence during the COVID-19 pandemic through a wave of emergency fundraising. SoFi has reached an agreement to purchase the majority of PrimaryBid's assets, a move that will end the UK-based firm's independent status.

Sources indicate that PrimaryBid informed its investors of this development in a letter on Monday, noting that the transaction will enable the return of an undisclosed sum to shareholders. In the letter, PrimaryBid stated, "While the company's financial position remains robust, with cash flow sufficient to sustain operations for several years, this outcome is considered optimal for shareholders given the domestic market environment."

Founded in 2016, PrimaryBid set ambitious goals to revolutionize the fundraising process by aggregating retail investor orders into single positions. Its vision was to enable ordinary investors to "break into" the corporate financing and listing arena, traditionally dominated by London's financial institutions, by pooling the demand of retail shareholders. This concept garnered support from politicians and market participants.

In 2020, PrimaryBid successfully participated in a £2 billion share issuance by FTSE 100 company Compass Group, a contract catering giant. Since then, the firm has been involved in hundreds of transactions, collectively helping businesses raise over £1.4 billion. However, the company faced significant setbacks due to the stagnation of London's IPO market, where issuance activity has recently dwindled to levels not seen in years.

Throughout its existence, PrimaryBid raised $250 million in equity financing, including a $190 million Series C round in 2022 backed by heavyweight investors such as SoftBank and Hedosophia. The London Stock Exchange Group (LSEG) was also an early supporter of the company.

SoFi's acquisition of PrimaryBid's assets, following an existing partnership between the two, highlights the divergent trajectories of the IPO markets in the United States and the United Kingdom. Companies including Elon Musk's SpaceX, along with AI giants Anthropic and OpenAI, are expected to go public as early as this year, with a combined valuation potentially exceeding $3.5 trillion. If these listings proceed as planned, at least two are anticipated to feature significant retail investor participation.

In Monday's letter to shareholders, PrimaryBid remarked, "The U.S. market is projected to experience an unprecedented wave of IPOs in the coming years, with retail investors becoming an increasingly vital component of these transactions."

"In addition to the asset acquisition, SoFi has arranged for certain members of our team to assist in integrating the PrimaryBid platform into SoFi's technology stack," PrimaryBid added. The company also noted that the sale process in recent months "attracted several other potential buyers and new large strategic partners."

"However, these were primarily private companies proposing all-stock transactions or commercial partnerships, with lengthy and uncertain paths to profitability," the letter explained. "After careful consideration, the board concluded that such offers do not represent the best interests of shareholders, given our goal of maximizing near-term liquidity."

PrimaryBid, once chaired by City veteran Sir Donald Brydon, had aspired to scale and become another UK fintech "unicorn," following in the footsteps of Monzo and Revolut. Recently, amid a slowdown in equity capital market activity, the company restructured its UK operations and exited regulated activities. In preceding months, it had explored deals to license its retail financing technology to the London Stock Exchange.

Last year, LSEG wrote down the value of its 7.2% stake in PrimaryBid by 87%, implying a valuation of just £56 million for the business at that time. The amount SoFi has agreed to pay for PrimaryBid's assets remains undisclosed, and it is expected that the remaining parts of the company will enter some form of liquidation.