Trump Media & Technology Group (TMTG), which is set to list in New York through a merger with Digital World Acquisition Corp DWAC, is reportedly looking to raise up to $1 billion by selling shares to hedge funds and family offices.
What Happened: The company associated with former President Donald Trump is seeking to raise up to $1 billion in addition to the $293 million it will receive if the merger deal goes through, reported Reuters, citing people familiar with the matter.
The DWAC-TMTG deal is valued at $875 million including debt, and with the latest plans to raise $1 billion, its valuation would ratchet up to $3 billion, as per Reuters.
On Wednesday, DWAC shares soared 24.92% in the after-hours session to $55.40. The shares closed the regular session 7.15% higher at $44.35.
Why It Matters: TMTG encompasses a new social media platform dubbed “TRUTH Social” and a subscription video-on-demand service called “TMTG+.”
Trump and DWAC dealmakers are seeking to maximize gains from market euphoria surrounding TMTG, which is yet to launch an app, noted Reuters.
DWAC shares were worth $10 each in the deal with Trump Media but now the company is in the process of carrying on with the private investment in public equity (PIPE), which would value its shares closer to its more recent market price, sources told Reuters.
The shares may be valued based on a 20% discount of their 10-day, volume-weighted average price.
Wednesday’s surge in the share prices of DWAC came as investors looked forward to the PIPE diluting existing DWAC shareholders less than expected.
Most Wall Street firms snubbed the opportunity to invest and many investors participating in the confidential roadshow for the PIPE are hedge funds, family offices, and high-net-worth individuals, Reuters reported.
Hedge funds that have backed DWAC include Saba Capital Management and Lighthouse Investment Partners — both have sold shares to distance themselves from the deal.
TMTG and DWAC asked investors to finalize commitments to the PIPE by mid-December.
Trump has reportedly been personally involved and called on some investors to ask for commitments to the PIPE of more than $100 million.
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