Chamath Palihapitiya to take Clover Health public in one other SPAC deal price $3.7 billion

Chamath Palihapitiya

Olivia Michael | CNBC

Chamath Palihapitiya has discovered his subsequent SPAC goal — Clover Health, a Medicare insurance coverage startup backed by Alphabet.

Clover will go public by way of a merger with Social Capital Hedosophia Holdings Corp. III, a particular function acquisition firm. The deal values Clover at $3.7 billion and consists of as much as $1.2 billion in money proceeds, $400 million of which will likely be offered via Palihapitiya’s personal funding within the public entity.

(Palihapitiya will likely be on CNBC’s Squawk Box Tuesday at eight a.m. ET to debate the deal)

The transfer got here simply three weeks after Palihapitiya unveiled his $4.8 billion SPAC deal with real estate startup Opendoor. The billionaire gained success along with his first blank-check transaction that took space-tourism firm Virgin Galactic public final 12 months and has been significantly energetic within the SPAC world in 2020. Palihapitiya beforehand revealed he has reserved tickers from “IPOA” via “IPOZ” on the New York Stock Exchange.

Founded in 2013, Clover sells Medicare Advantage within the U.S. and at present has greater than 57,000 members throughout seven states. The deal will present “important capital” for the corporate to “scale and enhance well being outcomes for seniors throughout the United States,” the corporate mentioned in an announcement on Tuesday.

A SPAC is shaped to lift funds to finance a merger or acquisition inside two years usually. The goal agency will likely be taken public via the acquisition.

As a substitute for conventional IPOs, SPACs have skilled explosive development this 12 months amid unprecedented volatility introduced on by the coronavirus pandemic. Total proceeds from SPACs have exceeded $40 billion this 12 months, practically tripling the degrees a 12 months in the past and on monitor for a report 12 months, in line with Refinitiv.

Many traders and firms flip to the SPAC route for its time effectivity in addition to certainty of execution. Companies can even skip the roadshow course of and keep away from a few of the scrutiny that goes with a conventional IPO. Meanwhile, involvement from high-profile traders together with hedge fund billionaire Bill Ackman and Oakland A’s govt Billy Beane introduced extra hype to this automobile.

Palihapitiya said last month that the SPAC increase is wholesome for the general market that’s shrinking by variety of shares and is extremely concentrated within the megacap expertise names. 

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