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Social Capital Hedosophia Holdings, a blank check company formed to acquire a large private tech company, raised $600 million in its IPO. The Palo Alto, Calif.-based effort priced 60 million units at $10 per unit, compared to original plans to only sell 50 million units. Credit Suisse served as sole underwriter. The issuer — formed by VC firms Social Capital and Hedosophia — will trade on the NYSE under ticker symbol IPOA.
- Why it's the BFD: There's an enormous glut of VC-backed "unicorns" that view the IPO process like Stan Uris views Pennywise. Social Capital and Hedosophia are offering a calmer entry to the public markets and, if successful, it could provide a new source of liquidity for venture investors.
- Check back: Kia is scheduled to speak with Social Capital's Chamath Palihapitiya later this morning, and we'll try to quickly post highlights.
- Bottom line: I still don't get it. While innovation in the staid VC and IPO markets is admirable (even with a 20% finder's fee), it's still unclear why a surging unicorn would avail itself of this option rather than a more traditional offering. Not only would it be deprived of the administrative and messaging discipline often developed via an IPO, but it also would have to accept that the few will be superior to the many when it comes to price discovery. And if it's a struggling unicorn, then why would the blank check shareholders want it, particularly with reduced disclosure requirements?
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- More from Preqin: The median management fee for buyout funds has remained static at 2% over the past decade, but the mean has fluctuated and comes in at 1.94% for all buyout funds raised or raising in 2017.