SoftBank Group Corp.

9984 -3.45%

, which recently invested $500 million in Better, could put in another $1.3 billion through a PIPE, or private investment in public equity, a common feature of SPAC mergers. (Better might place $400 million of that with other investors.) The remaining $200 million of the $1.5 billion PIPE is to come from Aurora, whose sponsor is the investment vehicle of Icelandic billionaire

Thor Bjorgolfsson.

There has been an explosion lately in deal activity involving SPACs, which raise money in an initial public offering and then look for a business to combine with, as private companies seek a more streamlined route to the public markets than through a traditional listing.

Founded in New York in 2014, Better provides home loans for consumers through its website and banks such as

Ally Financial Inc.

Better had over $850 million in revenue in 2020 and more than $200 million in net profits, according to people familiar with the company’s finances.

Like other mortgage lenders, Better rode a wave of homebuying and refinancing activity as interest rates reached historic lows, extending $25 billion in loans in 2020 and $14 billion in the first quarter of 2021 alone.

The company previously raised money from investors including

Goldman Sachs Group Inc.,

Kleiner Perkins Caufield & Byers and Healthcare of Ontario Pension Plan. It was last valued at about $6 billion when SoftBank bought shares from the company’s existing shareholders earlier this year, a sharp jump from the $4 billion at which it raised money in November.

Last year, brisk homebuying and refinancing activity set up the mortgage market for one of its best years ever. That sparked a wave of IPOs and other deal making, with companies like Quicken Loans parent

Rocket

Cos. going public and United Wholesale Mortgage choosing to merge with a SPAC. But as mortgage rates ticked up earlier this year, IPO activity cooled.

Write to Maureen Farrell at maureen.farrell@wsj.com