CNBC is bringing Chamath Palihapitiya on for yet another interview (the producers just had him on last week for another face-off with Scott Wapner during the channel's "Seeking Alpha' conference) Tuesday moring, but apparently news of Social Capital's latest SPAC-backed venture just couldn't wait.
Palihapitiya is one of the most visible big-name investors to embrace the SPAC trend, which has become one of the most visible trends of the year as investors look for more alternatives to the traditional IPO process. SPACs - Special Purpose Acquisition Vehicles - were once seen as a shady maneuver designed to bilk investors and enrich managers, but Palihapitiya - with help from other luminaries like Bill Ackman - has rebranded them as "IPO 2.0". Last week, the leisure brand Playboy went public in a SPAC deal valued at just under $400 million.
Now, not long after announcing a SPAC deal involving Opendoor, which Palihapitiya branded as his "next 10x idea", Palihapitiya's Social Capital has just struck a deal to take Clover Health Investments public via the typical SPAC reverse-merger process. As part of the deal, Palihapitiya is putting up $100 million of his own money, roughly a quarter of $400 million PIPE funding dedicated by Social Capital's backers. The deal is expected to raise another $828 million, which will be held in the trust account of Social Capital Hedosophia Holdings Corp. III, for a total of more than $1.2 billion.
It will be Palihapitiya's third SPAC deal through his Social Capital Hedosophia fund, following Opendoor and - more famously - the space tourism company Virgin Galactic.
According to the press release, the deal values Clover at an enterprise value of $3.7 billion and is expected to provide up to $1.2 billion in cash proceeds, including a fully committed PIPE of $400 million and up to $828 million of cash held in the trust account of Social Capital Hedosophia Holdings Corp. III
Clover's claim is it is "disrupting" insurance by offering Medicare Advantage plans that take advantage of the company's partnerships with health-care providers to leverage big-data tools to deliver "efficiencies" at the "point of care".
To be sure, health insurance is an industry rife with political risk. The industry also endured a wave of consolidation a couple of years ago which could mean that Palihapitiya's Clover play is an attempt to position the company for an acquisition by one of its much-larger publicly-traded rivals like Anthem or UnitedHealth.
News of the deal was leaked to the NYT, which published it early Tuesday. We expect to hear more from Palihapitiya at 0800ET, when he'll participate in an interview on CNBC's "Squawk Box".