Opendoor to go public by way of Chamath Palihapitiya SPAC

Andrew Cummings
September 18, 2020

Opendoor - a property-technology company that directly buys homes from sellers, makes improvements, and then resells them - is set to go public via a merger with Social Capital Hedosophia Holdings II.

Chamath Palihapitiya, who runs Social Capital, promoted taking large unicorns public by reserve mergers into SPACs (pecial goal acquisition companies). Last fall, his first SPAC merged with Richard Branson's Virgin Galactic in a deal that valued that company at $2.3 billion. The company has raised $1.5 billion prior to going public.

Palihapitiya did not immediately respond to requests for comment from TechCrunch via phone and e-mail.

Opendoor said the deal will result in $1 billion in cash proceeds, including a $600 million fully committed public investment in private equity (PIPE) and $414 million in a trust account held by the special objective vehicle. Opendoor perfectly embodies this vision. The initial market reaction appears positive: Social Capital Partners' holding company's stock was up 33.4 per cent at close. II (NYSE:IPOB) puts Opendoor at an enterprise value of $4.8B.

Social Capital, the blank-check firm backed by Virgin Galactic Chairman Palihapitiya, raised US$360 million when it went public in April.

The rest of the PIPE will be funded by another Palihapitiya group, some private entities like Access Industries, and what a release hyped as "top-tier institutional investors", including Blackrock and a pension plan.

A total of $1 billion in cash is expected to be provided in the transaction. Notably all the cash will flow to Opendoor itself, with shareholders in the company "rolling 100 percent of their equity into the combined company", per a notice.

It's official: After reports surfaced last week that Opendoor was in talks with Social Capital Hedosophia II, a special-purpose acquisition company led by the billionaire investor Chamath Palihapitiya, both parties confirmed the tie-up on Tuesday.

The transaction, which has been unanimously approved by the Boards of Directors of Opendoor and Social Capital Hedosophia, is subject to approval by SCH's shareholders and other customary closing conditions.

In 2018, SoftBank's Vision Fund invested $400 million in Opendoor, which was founded in 2014.

Other reports by iNewsToday