NJ-based Clover Health set to go public through blank-check company

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Clover Health, a Medicare-focused insurance startup based in Jersey City, NJ, said Tuesday it will go public after merging with the latest blank-check company from Silicon Valley investor Chamath Palihapitiya.

Clover, which has more than 57,000 members in seven states, will be valued at $3.7 billion. Palihapitiya will be investing $400 million in Clover through his blank-check company Social Capital Hedosophia Holdings Corp. III.

“We need companies like Clover to help fix our broken healthcare system,” Palihapitiya said in a statement. “The Company’s rapid growth is a testament to the effectiveness of its tech-enabled approach, which resonates powerfully with consumers and physicians alike.”

This is Palihapitiya’s third IPO in 12 months through a blank-check company, also known as a special-purpose acquisition company, or SPAC.

His first SPAC, Social Capital Hedosophia Holdings Corp. I, took Richard Branson’s Virgin Galactic public in October 2019 after a $2.3 billion merger, and he announced in September that his second SPAC has reached a $4.8 billion merger agreement with real estate startup OpenDoor.

SPACs are essentially pools of money that are listed on the market to attract investors for a merger with private company. Once that deal is complete, the acquired company goes public using the SPACs ticker symbol, subverting the fees and headaches of a traditional IPO.

According to SPACInsider, SPAC activity has more than doubled between 2019 and 2020, creating a more than $50 billion market that has attracted everyone from Bill Ackman to Alex Rodriguez and Jennifer Lopez.

But Palihapitiya, who made his name as an outspoke tech venture capitalist, is the current undisputed king of SPACs and appears very committed to doing more.

His first three SPACs have the respective ticker symbols of IPOA, IPOAB and IPOC. Palihapitiya has reserved every ticker through IPOZ.

A Global Asset Management Seoul Korea Magazine

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