Alphabet-Backed Clover Health Nears $3.7B Deal With Palihapitiya's SPAC To Go Public: Report

Alphabet Inc GOOG GOOGL and Sequoia-backed insurance startup Clover Health plans to go public via a merger with blank check company Social Capital Hedosophia Holdings Corp. III IPOC, reports the New York Times.

What Happened: The deal in advanced discussions values Clover Health at $3.7 billion and could be announced as soon as Tuesday, as per the Times. Social Capital III is led by venture capitalist Chamath Palihapitiya and investor Ian Osborne.

Insurance startup Clover Health collects and analyzes health and behavioral data to lower costs and improve medical outcomes for its customers. The company offers Medicare Advantage plans in 34 counties across seven states in the U.S. for 57,000 members.

As per a TechCrunch report, Clover boasts a valuation of $1.2 billion based on a 2017 funding round.

The company raised $500 million in January 2019 and is backed by venture capitalists like Alphabet’s venture arm GV, Sequoia Capital, Floodgate, Bracket Capital, First Round Capital.

Why Its Important: Special Purpose Acquisition Company (SPACs) have become a popular route for startups to go public by merging with them and avoid the scrutiny or risks of an initial public offering.

Palihapitiya and Osborne, in the partnership called 'Social Capital,' have listed three companies, and plan to list six more by raising $2 billion.

Their first SPAC merged with billionaire Richard Branson’s space company to form Virgin Galactic Holdings Inc. SPCE. Second SPAC Social Capital Hedosophia Holdings II Corp IPOB merged with OpenDoor.

Price Action: IPOC shares traded 10% higher at $14.4 in the pre-market session Tuesday.

See Also:

Chamath Palihapitiya Talks SPACs At Benzinga Boot Camp: 'It Unlocks Access To Growth Companies'

Chamath Palihapitiya Launches Three More SPACs: IPOD, IPOE, IPOF