Determine-affiliated SPAC plans to merge with mortgage financial institution

A blank check company affiliated with fintech Figure Technologies has signed a non-binding letter of intent to merge with a warehouse lender and bank holding company, aiming to bring its blockchain technology to the acquired financial institution.

The deal would combine Figure Acquisition Corp 1, founded by the management team of Figure Technologies, with an undisclosed, $3 billion- to $5-billion-asset holding company that provides home loans across the country. The special purpose acquisition company would take the bank public and allow it to leverage Figure’s technology, potentially introducing a system of originating loans as fully digital assets that can be traded in real-time as digital tokens.

“We believe the proposed transaction provides a unique value creation opportunity by combining the bank’s sound balance sheet, nationwide footprint and seasoned management team with our team’s deep understanding of, and experience with, the application of technology to regulated financial services businesses as well as the necessary capital to grow and execute against our shared vision of the future of banking,” said Michael Cagney, chairman of the SPAC and CEO of Figure Technologies, in a prepared statement. 

Michael Cagney, pictured here in 2016, co-founded SoFi, Figure Technologies, Provenance Blockchain and now also leads Figure-affiliated SPAC.

David Paul Morris/Bloomberg

The deal is still subject to the completion of due diligence and negotiation of a definitive agreement, and the SPAC has also asked for stockholder approval of a six-month extension to complete its initial business combination, which would push the deadline to Aug. 23. It raised $287 million with its launch and has been searching since early 2021 for a financial institution to take public.

Meanwhile Figure Technologies, founded in 2018 by Cagney, has been seeking a national bank charter. Figure Technologies originally applied with the OCC in 2020 for a specialized bank charter that didn’t require deposit insurance, but amended its application to include deposit insurance after a lawsuit from state regulators delayed the process. In June, Figure Technologies terminated its previously-announced merger agreement with non-bank mortgage lender Homebridge Financial. 

Figure Technologies offers mortgage refinancing, home equity lines of credit and an equity management platform that allows private companies to raise, manage, and trade equity using Provenance Blockchain, an open-source digital ledger also developed by Cagney in 2020, for loan origination, servicing, financing and private fund services. The fintech has recently partnered with investment firm titans Apollo Global Management and Hamilton Lane to launch new funds using Provenance, which has supported more than $12 billion in transactions, according to Figure.

Figure also developed Digital Asset Registration Technologies, a blockchain-based lien and eNote registry that allows lenders to originate and trade loans as digital tokens on Provenance. Cagney said the SPAC deal could allow the bank to use DART for its warehouse business.

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