Social Capital SPAC led by billionaire Chamath Palihapitiya will merge with Clover Health in $3.7 billion deal

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  • Social Capital Hedosophia Holdings Corp. III will merge with Medicare insurer Clover Health in a deal valuing the latter firm at $3.7 billion, according to a Tuesday press release.
  • The special-purpose acquisition company, or SPAC, led by billionaire Chamath Palihapitiya will use funds raised in its initial public offering to buy Clover Health and take the combined entity public.
  • The healthcare company “will build large market adoption and shareholder returns” by lowering patient costs and improving overall care, Palihapitiya said in his investment thesis.
  • Shares of the SPAC gained as much as 4% in early Tuesday trading.
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The blank-check company led by billionaire investor Chamath Palihapitiya plans to merge with Medicare insurer Clover Health and take the combined entity public.

Social Capital Hedosophia Holdings Corp. III will value Clover Health at $3.7 billion in the deal, which includes up to $1.2 billion in cash proceeds. The move aims to fuel Clover Health’s streak as the fastest-growing Medicare Advantage insurer in the US, according to a press release.

The special-purpose acquisition company, or SPAC, will use funds raised in its initial public offering to buy the insurance company and make it public. The blank-check company went public in April under the ticker IPOC, and has since soared roughly 24% amid Wall Street’s SPAC frenzy.

Social Capital Hedosophia’s deal will “help bring better healthcare across America,” Palihapitiya said in a Tuesday morning tweet.

“Over the next decade, our belief is that Clover Health will build large market adoption and shareholder returns by ‘bending the curve’ in healthcare delivering better outcomes at lower costs,” he added.

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Clover Health sells Medicare insurance in seven states and offers physicians software for aggregating data across patients. The model combines traditional healthcare with a data business more commonly seen in Silicon Valley. Physicians using the tool have lowered waste and patient costs while still delivering better care, according to a one-pager tweeted by Palihapitiya.

Shares of Social Capital Hedosophia III climbed as much as 4% in early Tuesday trading.

The merger is Social Capital Hedosophia’s third SPAC deal. The firm’s previous blank-check companies combined with Virgin Galactic and Opendoor, with the latter deal being announced just weeks ago.

SPAC deals have exploded in popularity this year amid strong investor demand and a large supply of private-market targets. More than $48 billion has been raised across 127 SPAC IPOs in 2020, according to tracking website SPACInsider.com. That trounces the $13.6 billion raised over 59 deals in 2019.

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