Social Capital Hedosophia (IPOA, IPOA.U) raised $600 million in an IPO yesterday morning. The offering sold 60 million units at $10, up from the original plan to sell 50 million units. The security represents a blank check company formed for the purpose of investing in emerging technology companies. Each IPOA.U unit consists of one Class A ordinary share and one-third of one warrant. Each whole warrant may be exercised for one Class A ordinary share at a price of $11.50 per share. Once the securities comprising the units begin separate trading, the Class A ordinary shares and warrants are expected to be listed on the NYSE under the symbols "IPOA" and "IPOA WS," respectively.
The CEO Chamath Palihapitiya is a very successful venture capitalist in Silicon Valley. He worked for Facebook (trying to increase its user-base) early-on, and has since invested in Pure Storage, Palantir, Box, Slack, among other companies that were acquired by Disney and Google. He also owns part of the Golden State Warriors and has investments in Amazon (AMZN) and Tesla (TSLA).
The (technology) IPO market has been soft because there is so much capital available in the private markets now-a-days, which has allowed companies like Uber to garner a +$60 bln valuation while remaining private. The high-quality technology companies that do come public inevitably hit the secondary market at aggressive valuations -- e.g. Snap (SNAP) +20x sales, which doesn't leave much opportunity for the average investor.
Social Capital Hedosophia Holdings' mission is to create an alternative path to a traditional IPO for disruptive and agile technology companies to achieve their long-term objectives and overcome key deterrents to becoming public. By leveraging its ‘extensive operational experience and network', they believe they can provide a number of significant benefits to potential targets and public market investors that can potentially lead to attractive long-term risk-adjusted returns in the public markets.
IPOA.U closed up 3% yesterday and is trading modestly higher again today.