Social Capital founder and CEO Chamat Palihapitiya will make a presentation at the 2018 Sohan Investments Conference on April 23, 2018 in New York City, USA. Reuters / Brendan McDermid
September 30, 2021
(Reuters) – Venture investor Chamath Palihapitiya has made a big bet on the “Blanchek” acquisition company and named it “SPAC King,” but despite the recent downturn, these transactions have been long-term. He said he is excited about his health.
Palihapitiya has raised billions of dollars in the stock market through SPAC, or a special purpose acquisition company set up to acquire unspecified private companies. Target assumes that the listing of the so-called blank check company will be a public company.
He said in an interview on Wednesday that a recent correction is needed after several quarters of a boom to “separate the wheat from the rice bran”.
The US Securities and Exchange Commission has so far launched 10 SPACs and facilitated many other deals. Palihapitiya called on SPAC’s sponsors to “raise the skins of the game” and strengthen investor cooperation. They say they need to invest more risky capital.
“The incentives are not tuned to deliver great results from the beginning of SPAC to the end of SPAC, and the most important thing we have to do is to give sponsors more capital. To force them to risk,” he said.
“So, if you want to raise $1 billion in SPAC, you have to come up with $100 million.”
SPAC managers are typically awarded warrants and founders’ shares, giving the merged company a much larger share of the investment allowed.
Paris Hapitia’s latest comment on the biased SPAC stimulus structure comes days after Elizabeth Warren and other Senate Democrats sent letters to some SPAC sponsors, including her, Michael Klein and Tillman Fetitta, asking about the stimulus arrangement. I will come later.
Through SPAC, Palihapitiya has worked with companies ranging from space travel company Virgin Galactic Holdings Inc. to home sales platform Opendoor Technologies Inc.
However, since the peak of the SPAC surge in March, investors have lost enthusiasm due to poor financial performance and oversight from lawmakers and regulators.
One of the SPAC transactions of Clover Health Investment Corporation, Paris Hapitia, has been accused by the bad-selling Hindenburg Research company of concealing a US Justice Department business investigation.
“When things go up, you get a lot of credit, and when things go down, you take on a lot of responsibility,” he said.
“I think we all need to take a step back. It will take a year for us to make a meaningful revolution in the capital markets and it will take years to make it happen.
(Reporting by Anirban Sen in Bangalore, edited by Richard Chang)
Paris Hapitia says slowdown in SPAC left “wheat and rice bran” apart
Source Link Paris Hapatia states that the downturn in SPAC left “wheat and rice bran” apart