Markets: Investor Chamath Forms 4 Biotech SPACs

Chamath Palihapitiya

The Chamath has struck again. To the unaware, that Chamath is Chamath Palihapitiya who’s known for debuting special-purpose acquisition companies (SPACs). After launching six SPACs on the public markets, he’s filed to launch four more and this time for the biotech industry. 

  • Chamath’s firm, Social Capital, in partnership with hedge fund Suvretta Capital Management has formed four SPACs targeting to raise $200mn each. They go by serial names Social Capital Suvretta I-IV with the respective tickers DNAA, DNAB, DNAC, DNAD.
  • The four SPACs will list on the Nasdaq stock market. By their filings, they’ll seek mergers in the biotech industry, an area with a lot of hot startups right now making potential targets.
  • After getting merger targets for four of his listed SPACs, Chamath didn’t slow down to incorporate four more to list on the markets. For the new SPACs, his firm Social Capital switched partners from London-based VC firm Hedosophia to American hedge fund Suvretta Capital.
  • Chamath’s four new SPACs have no warrants, meaning less friendly investor terms than usual SPACs. It’s not surprising given that the US Securities and Exchanges Commission (SEC) is scrutinizing the way warrants are issued in SPACs.
  • The filings for the new SPACs were unveiled just a day after fintech company SoFi merged with one of Chamath’s SPACs and began trading on the markets. That particular merger netted Chamath personal shares worth around $750mn.
  • Of the six SPACs Chamath has debuted so far, four of them have completed  mergers, respectively with Virgin Galactic, Clover Health, Opendoor, and SoFi. Rumors have it that the fifth target is high-end gym chain Equinox.
  • In the SPAC frenzy, Chamath has been one of the major beneficiaries to the tune of a $1bn+ fortune as estimated by Forbes. In the process, he’s drawn major criticism for selling over-hyped companies to retail investors and always coming out on top financially while the retail investors are left holding the risk bag. 

Photo credit: Max Morse for TechCrunch, licensed under CC BY 2.0

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