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SoFi's Expected $30 Billion IPO Adds Fuel To The Renren Fire

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SoFi's Expected $30 Billion IPO Adds Fuel To The Renren Fire
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Back in March, Benzinga covered the intrinsic value of fintech investments made by fading Chinese social media company Renren Inc (NYSE: RENN).

Among Renren's many investments, its approximate 25 percent stake in SoFi looked to be the most promising, as the company was looking to IPO at around $3.5 billion. On Tuesday, Business Insider's Jonathan Marino said SoFi CEO Michael Cagney was now looking for a $30 billion dollar IPO.

Cagney cited Dodd-Frank Wall Street Reform and Consumer Protection Act as the boost that accelerated its expected IPO valuation 10 times as much as what had been reported in March. One might be led to believe that investors in Renren would be ecstatic regarding this news.

However, management led by Renren CEO Joseph Chen is looking to take the company private at $4.20; Shares traded recently at $3.50.

Laughable Offer

Aptus Capital's John Romero told Benzinga, "If and when SoFi reaches a $30 billion market cap, this translates into $17 for RENN which is an asymmetrical return from its present share price of $3.50. Knowing SoFi's long-term objective just underscores how laughable the non binding offer of $4.20 is from present management."

While there are concerns with a struggling social media business, as well as macro concerns for China overall, it's interesting that the buyout offer has not been adjusted considering SoFi's meteoric rise in the fintech industry.

Opportunistic Move

Another minority U.S. investor in the company, Heng Ren’s Peter Halesworth, agrees that the current offer is deficient. Halesworth told Benzinga, "In the short term, we think Renren is worth over $6 per share. We believe this is an opportunistic move [by Renren management] on Sofi's IPO at the expense of minority shareholders."

Halesworth noted that Renren made its investment with SoFi with shareholder funds, therefore the reward [SoFi investment] should be shared with all shareholders.

It remains to be seen if and when SoFi makes its play for a $30 billion dollar IPO. However, disagreements between U.S.-listed Chinese companies and stateside investors continue to mount. While not notable to much of the general public, these go-private deals in China remain a source of great interest and debate.

Romero and Halesworth both have long positions in RENN.

Posted-In: Aptus Capital ChinaLong Ideas IPOs Top Stories Exclusives Tech Trading Ideas Best of Benzinga

 

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