Once touted as the SPAC King, Chamath Palihapitiya used blank check companies to take several private companies public.
But as the SPAC craze dies out, the billionaire venture capitalist is now distancing himself from those particular investment vehicles.
What Happened: According to a new filing, Palihapitiya currently holds less than 5% of shares in Clover Health Investments CLOV.
From Sept. 27 to Oct. 3, he sold more than 11 million shares of Clover Health ranging in price of $1.55 to $2.02 per share.
After the exit, Palihapitiya now owns some 19 million shares, or 4.99% of the company.
The reporting person on the filing was ChaChaCha SPAC C LLC — Palihapitiya’s former SPAC Social Capital Hedosophia III with the ticker IPOC. The transactions "allow the recognition of related tax losses," according to the filing.
The Clover Health SPAC merger was announced in October 2020. At the time, Clover Health boasted growth three times faster than the industry and having the fastest growing Medicare advantage plan in the U.S. It expected $880 million in revenue for 2021 and $1.72 billion in revenue by 2023.
Palihapitiya called the Clover Health deal “one of the most straightforward investments I’ve ever made.” He also expects Clover Health to achieve profitability by 2023.
Why It’s Important: The sale marks the latest in a string of recent exits from SPAC-related companies from the so-called SPAC king, including the liquidation of Social Capital Hedosophia Holdings Corp IV IPOD and Social Capital Hedosophia Holdings Corp VI IPOF.
“Over the past two years, we evaluated more than 100 targets and while we came close to doing a deal several times, we ultimately walked away each time for a couple of reasons,” Palihapitiya said.
The SPAC will liquidate with a net asset value expected at $10.01. The warrants for both SPACs will expire worthless.
“Looking back, I am proud of the companies we helped bring public – Virgin Galactic, Opendoor, Clover Health, SoFi, ProKidney and Akili. They are well positioned to bring innovation to each of the end markets over the next several years, and I am proud we were able to have played a role in each of their respective journeys.”
In August, Benzinga shared a look at how SPACs from Palihapitiya and associated PIPE deals have performed. Through Aug. 17, these were the returns on investments related to Palihapitiya:
- 18 Total SPAC deals: -22.7% average
- 10 Chamath-led SPACs: -21.2% average
- 6 Chamath-led SPACs with deals: -34.6%
- 8 PIPE deals: -17.0%
Outside of SPACs, Palihapitiya recently led the Series A financing for Harvesting Farmer Network, a company that provides access to farming tools and logistics in India.
Price Action: Clover Health shares trade at $1.79 at the time of writing versus a 52-week range of $1.55 to $8.58. Shares are down 75% over the last year and down 82% from the $10 SPAC price, making it one of the worst performing companies that Palihapitiya took public.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.