Venture capitalist Chamath Palihapitiya has decided to liquidate tech-focused blank check acquisition companies after failing to find enough merger targets.
Behind the scenes: Palihapitiya says the decision shows how many privately held tech companies haven’t reset their valuations despite a sharp drop in public tech stock prices. He added that the risk/reward is more promising in biotech and plans to open two biotech-focused SPACs.
- It also comes as the overall SPAC market struggles with shareholder redemptions before mergers close.
The big picture: Palihapitiya, a venture capitalist and one-time Facebook executive, has become one of the SPAC market’s most active sponsors. Of these, about 10, six focused on tech and four on biotech.
- Technology SPACs partnered with Hedosofia to complete four deals, including Virgin Galactic, Opendoor, Clover Health and Sophy.
- The biotech SPACs partnered with Suvreta Capital Management recently closed mergers for both ProKidney and Akili Interactive.
- The closing SPACs include Social Capital Hedosophia Holdings Corp. IV (NYSE: IPOD ) and Social Capital Hedosophia Holdings Corp. VI (NYSE: IPOF ). All earnings are returned to shareholders.