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Better HoldCo To Go Public Through Merger With Aurora Acquisition Corp.

In 2020, Better funded $24.2 billion in volume and 490% year-over-year growth from 2019  SoftBank commits to invest $1.5 billion via PIPE investment, of which $200 million will be

05/11/2021 06:38

In 2020, Better funded $24.2 billion in volume and 490% year-over-year growth from 2019 

SoftBank commits to invest $1.5 billion via PIPE investment, of which $200 million will be subscribed by Aurora's Sponsor, Novator Capital

Aurora Acquisition shareholder redemptions to be fully backstopped by Novator Capital

Transaction values Better at approximately $6.9 Billion pre-money equity value and anticipated that transaction will provide Better with $778 million of primary proceeds for continued expansion 

Vishal Garg and existing Better management to continue leading Better

Aurora Acquisition CIO Prabhu Narasimhan to Join Board of Directors

Better HoldCo, Inc.("Better" or the "Company"), one of the fastest-growing digital homeownership platforms in the U.S., and Aurora Acquisition Corp. (NASDAQ:AURC) ("Aurora"), a special purpose acquisition company, which closed its initial public offering on March 8, 2021, today announced that they have entered into a definitive merger agreement that will transform Better into a publicly-listed company. The transaction reflects an implied equity value for Better of approximately $6.9 billion and a post-money equity value of approximately $7.7 billion.

Better, a fully digital homeownership platform, offers mortgage, real estate, title, and homeowners insurance products all through one intuitive online platform. Since its founding in 2016, Better has digitized the mortgage process, eliminated origination fees and commissions, empowering its clients throughout their homeownership journey. Customers can find a rate in as little as three seconds, get approved in as little as three minutes, lock in rates in as little as 15 minutes, and close their loans in as little as two weeks. From getting pre-approved for a mortgage and hiring a realtor, to securing title insurance, Better provides customers a cheap, quick, and intuitive online home financing experience. A meaningful portion of funds from this transaction will be used to fuel growth in current and adjacent businesses and to continue improving the customer experience. Additional proceeds will be used to cash-out shares from existing Better investors.

Better Investment Highlights

  • Fast-growing homeownership platform, with over $24.2 billion funded loan volume and 490% year-over-year growth from 2019; $7.7B in title insurance placed, 855% growth from 2019, $1.4B in homeowners insurance placed 300% growth from 2019, and $691M in real estate transaction volume 471% growth from 2019;
  • Better's proprietary, data-driven technology platform, called Tinman, underpins Better's efficient, low-cost model, allows Better to offer customers lower rates;
  • Labor cost is 57% lower than MBA industry average, demonstrating our tech-driven efficiency;
  • 2020 Adjusted 2020 EBITDA of $281.1M;
  • An experienced management team led by founder and CEO Vishal Garg, with a proven record in consumer lending and fintech; CFO Kevin Ryan, with over 20 years of experience in financial services investment banking; CTU Diane Yu, with two decades experience in technical architecture and engineering; CCO Paula Tuffin, with over two decades experience in the law including at the Consumer Financial Protection Bureau; Head of Sales and Operations Sarah Pierce, overseeing thousands of Better team members across sales and operations;
  • A highly efficient team, who close an average of 16.2 loans per month, compared to 7.1 for the MBA industry average;
  • Currently licensed to operate in 47 states and the District of Columbia;
  • Industry leading partnerships on private label and co-branded basis for some of the best brands in financial services, American Express, Ally Financial and Progressive Insurance;
  • An award-winning product, most recently named among Nerdwallet's Best Mortgage Refinance Companies of 2021, LinkedIn's Top Startup of 2020 and a CNBC Disruptor 50: as well as being rated among the best mortgage refinance lenders by Forbes;

    As part of this transaction, SB Management Limited, a subsidiary of SoftBank Group Corp.,("SoftBank") will participate by committing to a $1.5 billion private investment in public equity ("PIPE") upon closing of the transaction. Aurora's sponsor, Novator Capital ("NC" or "Aurora's Sponsor") will invest $200 million through the PIPE, by taking up a portion of SoftBank's commitment, and also has committed to backstop any redemptions by Aurora shareholders of funds in its trust account, substantially increasing transaction completion certainty. Also participating in the PIPE is current Better investor, Activant Capital. Subject to customary closing conditions, the transaction is expected to close in the fourth quarter of 2021.

    "This transaction is the beginning of an amazing new chapter in Better's history," said Founder and CEO Vishal Garg. "This transaction provides investment capital to accelerate Better's growth and support our mission to make homeownership simpler, faster, more affordable and more accessible for all Americans, and eventually everyone else. This all got started because I wanted a place for my kids to call home. And through this journey I have only grown more confident in my belief that every child on this planet deserves a place they can call home, a place where they can dream, a place where they can invite their friends to play, a place they can count on to be there when they have a bad day, and one they can come back to when something like COVID happens and they just don't want to be alone. Everyone deserves a home, and we're not going to stop until we make it possible for everyone to not just dream of a home, but to have one. Now, every one of our customers and partners and friends will be able to participate in our growth and our mission. Together, we will make home better."

    Thor Björgólfsson, Chairman of Aurora Acquisition Corp. said: "We are pleased to partner with Better, an emerging market leader with proven executive management led by Vishal, an attractive business model and a highly scalable digital platform."

    Prabhu Narasimhan, Chief Investment Officer of Aurora, who will join the combined Company's Board of Directors, added: "Our Chief Executive Officer, Arnaud Massenet and I, are proud to have identified such an innovative and industry disruptive company to combine with. We firmly believe that Better will create substantial long term value for shareholders and will leverage its significant technology to lead the industry into the future."

    Transaction Overview

    The transaction has been approved by the Boards of Directors of both Better and Aurora. It is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including the approval of shareholders of Aurora and the stockholders of Better and certain regulatory approvals.

    Under the terms of the proposed transaction, Aurora will combine with Better, and Better will become a publicly-traded company. The transaction reflects an implied post-money equity value for Better of approximately $7.7 billion.

    Of the total consideration to existing stockholders of Better, $950 million will be paid in cash and the remainder in stock of the new Better. Existing Better shareholders can elect to receive cash or stock, subject to proration depending on whether cash elections are above or below $950 million. Certain existing holders have committed to elect cash for at least a portion of their shares, while others holders, including Vishal Garg, have committed to only elect stock consideration.

    After payment of the $950 million cash consideration, the remaining transaction proceeds, after paying expenses related to the transactions, of approximately $778 million will be used for general corporate purposes.

    Aurora, Aurora's Sponsor and Better are committed to the customers of Better. Accordingly, Aurora's Sponsor and Better have agreed that Aurora's Sponsor will voluntarily forfeit 50% of its private placement warrants and modify the remaining 50% to be redeemable at $18.00 per share. Aurora's sponsor also has agreed that 20% of its founder shares will be subject to price-based vesting. Major stockholders, members of Better's Board of Directors, and key executives of Better have agreed to enter into lock-up agreements as well.

    Additional information about the proposed transaction, including an investor presentation, has been provided in a Current Report on Form 8-K filed by Aurora today with the Securities and Exchange Commission ("SEC") and available at: www.sec.gov.