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The SPAC attack continues.
Lending startup SoFi on Thursday announced that it had agreed to merge with Social Capital Hedosophia Holdings Corp V, a blank-check company led by investor Chamath Palihapitiya, in a deal valuing the company at $8.7 billion.
Backed by investors including SoftBank and Silver Lake, SoFi had its start in student loans before branching out to home loan refinancings and other investment products. The company plans to use some of the $2.4 billion in cash it will receive from the new deal to finance its expansions, including paying back debt from its $1.2 billion acquisition of payments software company Galileo last year.
Nearly 250 SPACs were formed in 2020, breaking past the historical record by a moonshot. There’s good reason for the surge: Companies see the SPAC as a quicker way to raise funding and go public than via an IPO, while SPAC creators are often in for a big paycheck for taking a business to market. Private equity investor Alec Gores, for instance, turned $25,000 into $80 million after combining one of his many SPACs with United Wholesale, a mortgage company.
That’s thanks to a so-called 20% “promote,” which gives the sponsors of the deal, or those who formed the SPAC in the first place, 20% of the shares of the SPAC itself for a nominal price.
But with more SPACs than there are viable targets, SPACs are playing around with this so-called 20% promote to make themselves more attractive to potential acquirees. Hedge funder Bill Ackman’s SPAC did away with the promote entirely, opting instead to receive warrants that give him an option to buy shares in the combined company. The 20% has been negotiable in deals: The median promote ends up falling around 7.7% per a November study.
Still, the 20% promote mostly persists as the go-to in SPAC filings—as it did in Hedosophia Holdings Corp V’s S-1. Here’s IPO consultancy Class V Group’s Lise Buyers on the topic: “I think that the best of the best will be able to keep the 20%. But the performance of the companies merged into Hedosophia will be incredibly important to whether he will get the 20% promote or adjust to the new realities.”
Palihapitiya for his part has defended this payout in the past. In an interview with the Financial Times, the former Facebook executive said: “I just don’t understand why all of a sudden it’s OK for banks to make money, but it’s not OK for other people to make money.”
As part of the $2.4 billion, investors are also contributing some $1.2 billion as part of a private investment. Hedosophia (built by Palihapitiya and investor Ian Osbourne) is contributing $275 million. Investors including BlackRock, Altimeter Capital Management, Durable Capital Partners, and Healthcare of Ontario Pension Plan are paying $950 million.
As part of the $2.4 billion, investors are also contributing some $1.2 billion as part of a private investment. Hedosophia (built by Palihapitiya and investor Ian Osbourne) is contributing $275 million. Investors including BlackRock, Altimeter Capital Management, Durable Capital Partners, and Healthcare of Ontario Pension Plan are investing $950 million.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- WeLink, a Lehi, Ut.-based wireless broadband provider, raised $185 million. Digital Alpha Advisors invested.
- News Break, a Mountain View, Calif.-based news app, raised $115 million in Series C funding valuing it at over $1 billion. Francisco Partners led the round.
- LEXEO Therapeutics, a New York-based clinical-stage gene therapy company, raised $85 million in Series A funding. Longitude Capital and Omega Funds led the round and were joined by Lundbeckfonden Ventures, PBM Capital, Janus Henderson Investors, Invus, Woodline Partners, the Alzheimer’s Drug Discovery Foundation, and Alexandria Venture Investments.
- DiCE Molecules, a South San Francisco, Calif.-based biopharmaceutical company focused on immunology, raised $80 million in Series C funding. RA Capital Management led the round and was joined by investors including Eventide Asset Management, New Leaf Venture Partners, Soleus Capital, Driehaus Capital Management, Osage University Partners, Asymmetry Capital Management, Northpond Ventures, Sands Capital, Sanofi Ventures, Alexandria Venture Investments, Altitude Life Science Ventures, and Agent Capital.
- Endeavor BioMedicines, a San Diego-based company focused on pulmonary diseases, raised $62 million in Series A funding. Omega Funds and Longitude Capital led the round.
- Hipcamp, a site for booking campsites, raised $57 million in Series C funding valuing it at over $300 million, per the Information. Investors include Index Ventures and Bond Capital. Read more.
- Carrum Health, a San Francisco-based healthcare payments tech company, raised $40 million. Investors include Tiger Global Management, GreatPoint Ventures, Cross Creek, Wildcat Venture Partners, and SpringRock Ventures. Read more.
- Abcuro, a Newton, Mass.-based company focused on autoimmune diseases and cancers, raised $42 million in Series A1 funding. Mass General Brigham Ventures and Sanofi Ventures led the round and was joined by investors including Pontifax Venture Capital, Hongsen Investment Group, RA Capital Management, and Samsara BioCapital.
- Syndio, a Seattle-based equity analysis platform, raised $17.1 million in Series B funding. Bessemer Venture Partners led the round and was joined by investors including Next Play Capital and Concrete Rose Capital.
- SilviaTerra, a forestry company for organizations to exchange carbon offsets, raised $4.4 million seed round with Union Square Ventures' climate-tech fund led the round and was joined by investors including Marc Benioff, Ben Silbermann, Mark Tercek, Scribble Ventures, Gratitude Railroad, Alpha Edison, and CoFound Partners.
- TaxBit, a Salt Lake City, Ut.-based cryptocurrency tax automation software company, raised an undisclosed amount of funding from PayPal Ventures, Coinbase Ventures, and Winklevoss Capital.
- Groundspeed Analytics, an Ann Arbor, Mich.-based maker of software for the property and casualty insurance industry, raised an undisclosed amount of Series C funding. Insight Partners led the round and was joined by investors including Oak HC/FT.
PRIVATE EQUITY
- Blackstone and Cascade (Signature Aviation’s biggest shareholder) are in talks to take over Signature Aviation, a London-based aviation firm, putting the team in a potential bidding war against Carlyle. Read more.
- Ara Partners acquired a controlling stake in Polar Sapphire, a Canadian maker of aluminum oxide powder. Financial terms weren't disclosed.
- Arcline Investment Management acquired Ohmega Technologies, a Culver City, Calif.-based manufacturer of embedded thin-film resistive materials. Financial terms weren't disclosed.
- Bloomerang, backed by JMI Equity, acquired Kindful, a nonprofit software maker. Financial terms weren't disclosed.
- Caprion-HistoGeneX, backed by Arsenal Capital Partners, acquired Clinical Logistics, a Canadian outsourced clinical research company. Financial terms weren't disclosed.
- CriticalPoint Capital acquired Shoes.com, a Boston-based shoe company, from Walmart. Financial terms weren't disclosed.
- Frazier Healthcare Partners acquired a stake in CSafe Global, a Dayton, Oh.-based cold chain portfolio company of Thomas H. Lee Partners. Financial terms weren't disclosed.
- Dalbo Holdings, a portfolio company of Lincolnshire Management, acquired Blazer Water Transfer, a water transfer service provider in the Permian Basin. Financial terms weren't disclosed.
- Gemspring Capital recapitalized Wireless Vision, a Bloomfield, Mich.-based T-Mobile dealer. Financial terms weren't disclosed.
- Groundworks, backed by Cortec Group, acquired Dry Pro, a Charlotte, N.C.-based provider of waterproofing and concrete services. Financial terms weren't disclosed.
- Incline Equity Partners invested in Jon-Don, a Roselle, Ill.-based provider concrete and carpet cleaning supplies. Financial terms weren't disclosed.
- Infab, a portfolio company of HKW, acquired MediDrapes, a Las Vegas-based provider of disposable drapes for medical imaging. Financial terms weren't disclosed.
- Mercer Global Advisors, backed by Oak Hill Capital and Genstar Capital, acquired Atlanta Financial Associates, an Atlanta, Ga.-based wealth manager.
- Hellman & Friedman invested in PointClickCare Technologies, a Toronto-based provider of healthcare software. Financial terms weren't disclosed.
- Options Technology, backed by Abry Partners, agreed to acquire Fixnetix, a London-based market data firm. Financial terms weren't disclosed.
- Partners Group acquired Careismatic Brands, a Chatsworth, Calif.-based provider of healthcare apparel, from New Mountain Capital. Financial terms weren't disclosed.
- Ridgemont Equity Partners recapitalized SEKO Logistics, an Itasca, Ill.based logistics provider. Financial terms weren't disclosed.
- Rubelmann Capital acquired Hotel Business and InspireDesign, hospitality trade media brands, from ICD Publications.
- Serent Capital invested in XDimensional Technologies, a Brea, Calif.-based property and casualty insurance tech company. Financial terms weren't disclosed.
- CVC Capital Partners agreed to acquire STARK Group, a Denmark-based distributor of heavy building materials in Northern Europe. Financial terms weren't disclosed.
- Smart Communications, backed by Accel-KKR, agreed to acquire Assentis, a Swiss customer communications management company. Financial terms weren't disclosed.
- SmilePartners-USA, a portfolio company of Silver Oak Services Partners, acquired PEDIA, a Chicago-based provider of dentistry and oral surgery services. Financial terms weren't disclosed.
- Spire Capital invested in The Inception Company, a Fairfield, NJ.-based provider of virtual meeting tech company. Financial terms weren't disclosed.
- Vector Capital acquired Mood Media, an Austin-based media solution company. Financial terms weren't disclosed.
- Vivo Capital invested in Serán Bioscience, a Bend, Ore.-based development and manufacturing organization for pharmaceutical and biotechnology companies. Financial terms weren't disclosed.
- Hilco Vision, a portfolio company of Windjammer Capital Investors, acquired M&S Technologies, a Niles, Ill.-based provider of digital vision testing technology. Financial terms weren't disclosed.
- Wynnchurch Capital acquired Insulation Corporation of America, an Allentown, Pa.-based maker of polystyrene foam products. Financial terms weren't disclosed.
OTHER
- Acacia Communications, a Maynard, Mass.-based optical components companies, terminated a $2.8 billion merger deal with Cisco Systems after failing to receive regulatory approval from China. Read more.
IPOs
- Driven Brands Holdings, a Charlotte, N.C.-based automotive services company, is seeking to raise as much as $760 million for its IPO. Roark Capital backs the firm. Read more.
- Playtika Holding, an Israeli mobile game maker, is looking to raise as much as $1.67 billion in a U.S. IPO. Read more.
SPACs
- SVF Investment Corp., SoftBank’s SPAC, raised $525 million. Read more.
- Achronix, an Ithaca, N.Y.-based semiconductor company, agreed to merge with ACE Convergence Acquisition Corp. (NASDAQ: ACEV), a SPAC.
F+FS
- Transformation Capital Partners, a Boston-based growth equity firm, raised $500 million.
