January 15, 2021 | Speculative Blank Check Companies Create Billions of Paper Profits
Hilliard MacBeth Author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash
A $12.5 million investment in clean energy earned an “accidental” profit of $200 million from a blank-check company. Here is how that works.
Blank-check companies SPACs or Special Purpose Acquisition Companies are proliferating, a strong signal that this market has gone wild.
Blank-check vehicles are shell companies used to take a private company public while bypassing the normal requirements for a stock market listing. Along the way many people gain substantial riches, sometimes without taking any risk.
Even institutional investors, like AIMCO and the Health Care of Ontario Pension Plan, are getting involved in this hot market. One of the largest funds to participate is Saudi Arabia’s $300 billion Public Investment Fund.
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What Happened: Shareholders of
Social Capital Hedosophia Holdings Corp III (NYSE: IPOC) voted to approve a merger with Clover Health.
The merger deal values Clover Health are $3.7 billion.
What’s Next: Share of Social Capital Hedosophia Holdings Corp III are likely to stop trading as IPOC on Jan. 7. Shares of the new company will trade as symbol CLOV on the Nasdaq.
Current shareholders of Social Capital Hedosophia Holdings Corp III will own 18.7% of the new company.
Price Action: Shares of Social Capital Hedosophia Holdings Corp III are trading up 1% to $15.23. Shares fell 3% on Tuesday.
SoftBank Billionaire Puts a New Spin on SPAC Mania - The Washington Post washingtonpost.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from washingtonpost.com Daily Mail and Mail on Sunday newspapers.
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Chamath Palihapitiya has been one of the most well-known names in the SPAC market in 2020.
Palihapitiya has announced deals for his first three SPACs IPOA, IPOB and IPOC and also been a financer of several SPACs via PIPEs.
The legendary SPAC investor launched three SPACs that are all trading at a premium.
Three New SPACs: The three newest SPACs from Palihapitiya are
Social Capital Hedosophia Holdings Corp IV (NYSE: IPOD),
Social Capital Hedosophia Holdings Corp V (NYSE: IPOE) and
Social Capital Hedosophia Holdings Corp VI (NYSE: IPOF).
All three SPACs have the same management team, with one additional team member making the difference for the names. All three are also targeting the technology market.