Monday, December 27, 2021

Digital Homeownership Platform Better Announces Up to $1.5 Billion in Bridge Financing and Convertible Notes with Aurora Acquisition Corp. and SoftBank; Company to Accelerate Transformation of the Homeownership Experience

Better HoldCo, Inc. (“Better” or the “Company”), one of the fastest-growing digital homeownership platforms in the world, and Aurora Acquisition Corp. (NASDAQ: AURC) (“Aurora”), a special purpose acquisition company, announced on May 11, 2021 a definitive merger agreement that would transform Better into a publicly-listed company. On November 30, the two companies announced an amended agreement that provides Better with immediate capital to fortify its balance sheet and accelerate the growth of its business. Aurora and SoftBank remain committed to their long-term partnership with Better and are working towards completion of the business combination in a timely manner. The amendments to the transaction do not change the implied equity value for Better of approximately $6.9 billion.

The details of the revised transaction are as follows:

  • The new agreements replace the previous up to $1.78 billion of financing from Aurora and SB Northstar LP, a fund managed by SB Management, a subsidiary of SoftBank Group Corp., ($1.5 billion PIPE and $278 million backstop of Aurora’s trust account share redemptions) of which $950 million of such financing proceeds would have been used to purchase shares from existing Better stockholders, with a $1.5 billion transaction in which all proceeds go directly to Better’s balance sheet (i.e., no secondary purchase from existing Better shareholders) to accelerate growth as the mortgage industry undergoes radical transformation.
  • The $1.5 billion transaction comprises a $750 million bridge note funded immediately that converts into common equity at closing of Better’s merger with Aurora, and an additional commitment by Aurora’s sponsor and SoftBank to fund up to a $750 million (less amounts remaining in Aurora’s trust account after redemptions) convertible note at Better’s option within 45 days after closing of Better’s merger with Aurora.  The transaction adds onto SoftBank Vision Fund 2’s original $500 million investment in Better, in which it purchased shares from existing Better stockholders in April 2021.
  • With the $750 million bridge financing, Better will have over $1 billion of cash and cash equivalents on its balance sheet.
  • Both parties remain committed to their long-term partnership with Better and are supportive of increased capital to Better’s balance sheet.
  • Given the new capital to Better is now up to $1.5 billion, which is fully committed by SoftBank and Novator Capital in the same ratios as their previous PIPE commitments, the redemption backstop of Novator Capital for shareholder redemptions from Aurora’s trust account has been terminated.

“At Better, we put the customer at the absolute center of everything we do,” said Better CEO, Vishal Garg. “And that focus has enabled us to double our market share over the past 12 months while many in the industry have stayed in place, or, more recently, retrenched. The next two years are going to be a time of massive change in the US real estate market. The COVID bump that helped sustain legacy players in the industry over the past 18 months is fading, and we expect a large number of our competitors to scale back their automation and vertical integration efforts.”

“This is exactly the time for us to lean in and accelerate our customer-focused product innovation, and grow our B2B business, which we believe provides us with greater defensibility in a tougher mortgage market,” Garg continued. “The incremental $750 million of capital in the form of a commitment to fund a convertible note, on top of the $750 million of cash coming immediately to the balance sheet, will help us to do exactly that.”

Prabhu Narasimhan, Chief Investment Officer of Aurora, who will join the board of directors of Better Home & Finance Holding Company as a director following the closing of the business combination, said: “We are pleased to accelerate the capitalization of Better’s balance sheet so they can take immediate advantage of the opportunities ahead of them.”

About Better

Founded in 2016, Better is a digital-first homeownership company whose services include mortgage, real estate, title, and homeowners insurance. From its founding in 2016 through mid-2021, Better funded over $45B in home loans and provided over $25B in cumulative coverage through Better Cover and Better Settlement Services, the insurance divisions of Better. Better has raised over $400M in equity capital since inception. The company was ranked #1 on LinkedIn’s Top Startups List for 2021 and 2020, #1 on Fortune’s Best Small and Medium Workplaces in New York, #15 on CNBC’s Disruptor 50 2020 list, as well as being listed to Forbes FinTech 50 for 2020. For more information, follow @betterdotcom.

About Aurora Acquisition Corp.

Aurora Acquisition Corp. is a newly formed blank check company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The Company is led by Thor Björgólfsson as its Chairman, Arnaud Massenet as its Chief Executive Officer, and Prabhu Narasimhan as its Chief Investment Officer.

Through its philosophy of “founders investing in Founders”, Aurora looks to empower strong management teams and make long term investments in companies poised for sustained success. Aurora is sponsored by Novator Capital.


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