Aug 24, 2017

How two VC firms could help a "unicorn" go public

Mark Lennihan / AP

There's a new upcoming IPO on the docket. But in an unusual twist, it's from a pair of venture capital firms—Social Capital and Hedosophia—according to an SEC filing. It plans to trade on the New York Stock Exchange under the symbol "IPOA.U."

What it is: Social Capital Hedosophia Holdings Corp. is essentially a shell company that will go public and raise funds with the goal of acquiring or merging with a private company (which hasn't been selected yet). This transaction will allow the latter to skip over the arduous process of an IPO while also enjoying the benefits of being a publicly traded company. The company will also benefit from the capital injection of merging with this entity. Social Capital declined to comment.

  • It's what's known as a "blank check" company, meaning investors are betting on the team without knowing what they intend to buy. It's not super common, but not unheard of. More than a decade ago, three former Apple executives raised a bundle for a blank check company, but investors ended up losing most of their money.
  • Notably, the filing points out the growing number of "unicorns"—privates company valued at over $1 billion—relative to public companies of the same size (roughly150 to 200), suggesting the entity is likely to target a unicorn for its acquisition or merger.
  • Several venture capitalists have voiced concerns recently about the growing number of unicorns that are choosing to remain private for longer periods of time (which often means less liquidity for these investors than in previous eras).
  • We're already beginning to see some companies look into alternative routes, such as Spotify which is rumored to be considering a direct listing instead of an IPO.

Details: Social Capital Hedosophia Holdings Corp. will offer 50,000,000 units (or 57,500,000 units if the underwriters' over-allotment option is exercised in full), at $10 per unit, according to the document, raising between $500,000,000 and $575,000,000. Credit Suisse is the sole book-running manager for the IPO. The story has been updated with additional context and to correct Social Capital's firm name.

Go deeper

In photos: Americans venture out for Memorial Day weekend

Venice Beach in Los Angeles on May 24. Photo: David McNew/Getty Images

Authorities warned Americans to take precautions against the coronavirus pademic amid reports of packed beaches and bars during the Memorial Day weekend.

The big picture: Law enforcement stepped up beach patrols, authorities on Florida's Gulf Coast closed parking lots because they were full and there were crowded scenes at Lake of the Ozarks bars in Missouri, per AP, which reports a shooting injured several people at a packed Daytona Beach in Florida.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 9:30 p.m. ET: 5,405,029 — Total deaths: 344,997 — Total recoveries — 2,168,408Map.
  2. U.S.: Total confirmed cases as of 9:30 p.m. ET: 1,642,021 — Total deaths: 97,698 — Total recoveries: 366,736 — Total tested: 14,163,195Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 53 mins ago - Politics & Policy

Republicans sue California over mail-out ballot plan

California Gov. Gavin Newsom during a February news conference in Sacramento, California. Photo: Justin Sullivan/Getty Images

President Trump accused Democrats of trying "Rig" November's general election as Republican groups filed a lawsuit against California Sunday in an attempt to stop Gov. Gavin Newsom (D) from mailing ballots to all registered voters.

Driving the news: Newsom signed an executive order this month in response to the coronavirus pandemic ensuring that all registered voters in the state receive a mail-in ballot.