Sept 15 (Reuters) - U.S.-Israeli fintech Pagaya on Wednesday agreed to go public through a merger with special-purpose acquisition company EJF Acquisition Corp (EJFA.O) in a deal with an enterprise value of $8.5 billion. The deal will result in gross proceeds of $288 million from cash held in the blank-check firm"s trust and a $200 million private investment in public equity (PIPE) from entities affiliated with EJF Acquisition. Shares of EJF Acquisition rose 1.8% to $9.86 in premarket trade. Founded in 2016, Pagaya manages assets for banks, insurance companies, pensions funds, asset managers, and sovereign wealth funds using artificial intelligence.The fintech, led by co-founder and former UBS (UBSG.S) executive Gal Krubiner, earns a majority of its revenue from fees generated by institutional investors making purchases of products enabled by its AI network. Last year, it raised $102 million in a private funding round led by Singapore sovereign wealth fund GIC. Other investors in the round included insurer Aflac Inc"s Aflac Global Ventures, Bank Hapoalim"s Poalim Capital Markets, Viola and Harvey Golub - the former CEO of American Express. Existing investors of Pagaya are expected to retain about a 94% ownership stake in the combined company. The deal comes as activity slows in the blank-check space due to growing investor caution and deepening regulatory scrutiny. SPACs are publicly listed investment vehicles with no business operations. They are created with the purpose of merging with a private company at a later date, to take it public by sidestepping a traditional IPO. The merger has been unanimously approved by the board of both companies and is expected to close early next year. UBS Investment Bank and Barclays served as financial and capital markets advisor to EJF Acquisition, while J.P. Morgan Securities exclusively advised Pagaya on the deal.