U.S based healthcare insurance company Clover Health will be going public through a merger with a blank check company Social Capital Hedosophia Holdings Corp in a deal worth $3.7 billion inclusive of debt.
This year numerous companies have opted to go public through mergers with blank check companies also known as special purpose acquisition company (SPAC). These SPAC’s act as shell companies which raises money in the IPO to buy and merge with another company.
The company’s President and co-founder Andrew Toy said they were contemplating a traditional initial public offering but after wide consultations and considerations they opted to go public via ma merger with a SPAC.
The merger deal will be a cash and stock one including $50 million from Hedosophia and an investment worth $100 million from founder and CEO of Social Capital Chamath Palihapitiya.
Clover Health has notable investors including Alphabet Inc. (GOOGL) and Sequoia Capital. Following the IPO Sequoia Capital is expected to get $728 million from the proceeds around $500 million of this will be disbursed to existing shareholders.