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Chamath Palihapitiya, one of the most associated figures in the fashion of blank check companies, plans to raise $ 800 million for four cash deposits for biotech companies, injecting a shock into a market that has faltered the last few months.
Plans for new special-purpose acquisition companies, disclosed in the securities filing, showed that the billionaire investor and former Facebook executive is partnering with new partners for his next project. The spaces raise money on an IPO and then look for a private company to acquire.
The four new Spacs, all with brand names starting with “DNA,” will work in collaboration with Kishen Mehta, a health-focused portfolio manager at Suvretta Capital Management.
Palihapitiya has a long collaboration with Ian Osborne, a British investor. The couple launched six Spac vehicles together under the name Hedosophia Share Capital and have made public four companies through reverse mergers. Palihapitiya will continue to work with Osborne, said a person familiar with the share capital.
Another difference is that Morgan Stanley will advise Palihapitiya on his latest adventure. Serial sponsor Spac had previously relied on Swiss lender Credit Suisse.
Palihapitiya has also decided to waive guarantees for its latest Spac series in what will be a test case about investors ’appetite for unsweetened vehicles for early sponsors.
Sponsors have been criticized for delivering free warrants to early investors who can keep them even if they sell out of the company. The guarantees, which become stakes in the new company at a strike price of $ 11.50, often dilute shareholders who buy later.
The timing of the new Spacs of Palihapitiya comes to a complicated conjuncture for a market struggling with increased regulatory control and declining investor confidence.
Palihapitiya, known to some as “King Spac,” has also become the target of criticism for promoting blank check companies to his followers, while charging one of his deals. A representative of Palihapitiya refused to delve into the presentation of values.
The new releases come after two months in the fall for Spac’s new charts, yes slowed down dramatically after U.S. securities regulators took aim at vehicles and banks restricting lending to cover funds that provided much of the capital.
About 32 Spacs were publicly traded in April and May, compared to 298 in the first quarter of 2021, according to data provider Dealogic. More than 400 of the vehicles launched since early 2019 are still looking for companies to acquire, according to Refinitiv data.
Additional reports of Miles Kruppa in San Francisco
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