Financial technology unicorn Social Finance Inc., better known as SoFi, today said that it has inked a deal to acquire partner Galileo Financial Technologies Inc. for $1.2 billion in cash and stock.

Galileo will operate as an independent subsidiary of SoFi after the transaction is completed. The company’s chief executive officer, Clay Wilkes, will stay at the helm.

San Francisco-based SoFi provides an assortment of personal finance services, including student loan refinancing, bank accounts and mortgages via its online platforms. The company counts more than a million members in the U.S. SoFi has emerged as one of the leading players in the global fintech ecosystem, raising $2.5 billion from investors over its nine years in existence.

Galileo, in turn, provides application programming interfaces that financial companies use as building blocks for their digital services. Galileo’s APIs handle tasks such as managing credit card numbers, processing money transfers, setting up bank accounts and dozens of other common banking activities. The company has counted SoFi as a customer since last year.

Unlike SoFi, Galileo took in only minimal outside funding for most of its 19-year history up until October, when it raised a $77 million round led by Accel. Sources told Crunchbase News that the acquisition represents a fourfold return for the venerable venture capital firm.

The steep price SoFi has agreed to pay is a function of Galileo’s prominent role in the fintech ecosystem. The company’s APIs power not only SoFi’s services but also the offerings of several of its biggest rivals, among them Robinhood Financial LLC and London-based Revolut Ltd., a digital banking startup recently valued at $5.5 billion. Across its entire customer base, Galileo processed over $53 billion worth of annualized payments last month.

SoFi’s purchase of Galileo is bound to raise eyebrows among competing fintech startups that rely on its APIs. But SoFi CEO Anthony Noto (pictured) told CNBC today that he sees the deal benefiting Galileo customers by giving them access to more services. The executive also addressed the coronavirus pandemic, saying both firms are “stable and performing well.”

“Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation, making those products and services available to both current and future partners,” Noto said in a statement.

The fact that Galileo APIs power some of SoFi’s top rivals means antitrust officials are likely to pay particularly close attention to the transaction details as the acquisition goes through the regulatory review process. The deal’s ramifications for the broader market may also attract attention in the U.K., where Galileo is said to count all five of the country’s largest fintech startups as customers. 

Image: SoFi