Spac promoter Palihapitiya seeks US$800 million to target biotech companies

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Chamath Palihapitiya is one of the figures most associated with the bad check company boom. He plans to raise $800 million for four cash shells for biotech companies, injecting a shock into the faltering market in recent months.

The plans for the new special-purpose acquisition company disclosed in securities documents indicate that the billionaire investor and former Facebook executive is working with new partners on his next project. Spacs raises funds in an IPO and then looks for private companies to acquire.

The four new Spacs stock names all begin with “DNA” and will work with Suvretta Capital Management’s healthcare portfolio manager Kishen Mehta.

Palihapitiya and Ian Osborne, British investor. The two jointly launched six Spac cars under the name of Social Capital Hedosophia and listed four companies through a reverse merger. A person familiar with social capital said that Palihapitiya will continue to cooperate with Osborne.

Another difference is that Morgan Stanley will provide advice on Palihapitiya’s latest adventure. Spac’s successive sponsors had previously relied on Credit Suisse.

Palihapitiya also decided to abandon his latest Spac series of warrants, which will be a test case of investors’ appetite for vehicles of early supporters without this sweetener.

Sponsors have been criticized for issuing free warrants to early investors, who can hold these warrants even if they sell the company. The conversion of the warrants into shares of the new company at an execution price of $11.50 often dilutes the shareholders who purchase them later.

The time for Palihapitiya to launch the new Spacs is just right Tricky juncture For a market that is struggling with increasingly strict regulatory review and weakening investor confidence.

Palihapitiya, known by some as the “King of Spa”, has also become a target of criticism for promoting the blank cheque company to his followers while also profiting from one of his transactions. Palihapitiya’s representative declined to elaborate on the securities filing.

The new releases were made two months after the new Spac’s listing, and these listings have already Slow down After U.S. securities regulators targeted these tools, banks cut loans to hedge funds that provided most of the funds.

According to data from data provider Dealogic, about 32 Spacs went on the market in April and May, down from 298 in the first quarter of 2021. According to data from Refinitiv, more than 400 of the cars launched since the beginning of 2019 are still looking for company acquisitions.

Additional reporting by Miles Kruppa in San Francisco

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