Sri Lankan billionaire Chamath Palihapitiya targets US$800m via blank check companies to back biotech

Business | 3 Jun 2021 9:51 am

Four blank-check companies, backed by venture investor Chamath Palihapitiya, are looking to raise a total of US$800 million through initial public offerings with a focus on acquiring biotechnology firms, regulatory filings showed on Wednesday, Reuters r reports.

The new companies, Social Capital Suvretta Holdings Corp I, II, III and VI, said they will not offer warrants in the IPO, long seen as a key incentive for investors to lock up their money in special purpose acquisition companies (SPACs).

SPACs typically offer shares with warrants, which entitle them to buy more shares at a certain price, making the offer an attractive feature if the underlying stock price goes up.

A blank-check company, also known as SPAC, uses capital raised through an IPO to buy a private company, usually within two years. The deal then takes the private company public.

Sri Lankan Chamath Palihapitiya has been a prolific backer of blank check firms, merging them with a range of companies, from space tourism firm Virgin Galactic Holdings Inc to home-selling platform Opendoor Technologies Inc.

"We believe we can support biotechnology companies in developing a long-term financing strategy and raising capital beyond a short-term window, which the traditional IPO route does not address," said Palihapitiya, who expects a "significant" number of private biotech firms to go public in the near term.

The new SPACs have a one-year lock-up on founder shares, only exception being if the shares trade above US$12 for 20-30 trading days, but no earlier than 150 days following the close of a deal, the filings showed.

The companies, which have Morgan Stanley as the sole book-runner on their offerings, will list on the Nasdaq under the symbols 'DNAA', 'DNAB', 'DNAC' and 'DNAD', respectively.


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