You may be familiar with Virgin Galactic stock SPCE that went public in October 2019. The company that made that possible was Social Capital Hedosophia’s original SPAC with the ticker symbol IPOA. That fund took a 49% ownership stake in VG and made the Social Capital founder, Silicon Valley mega-capitalist Chamath Palihapitiya the chairman of Virgin Galactic’s board.
Chamath Palihapitiya was a successful starting engineer at Facebook climbing to management while making side investments in Silicon Valley start-ups. With his success in investing, he soon left Facebook in 2011 to start his own investment firm focusing on technology within healthcare, financial services and education. So when SPAC stocks like IPOB and IPOC, or Social Capital Hedosophia II and III are created to set-up funds for investing in non-US technology companies you should put your ear to the streets.
Chamath has been an early investor in companies like Palantir, Pure Storage, Bumptop and Playdom while he was at Facebook. Since starting his Social Capital firm, they have invested in companies like Slack, Box, Yammer, SecondMarket, Glooko, and obviously now Virgin Galactic.
So What Are IPOB And IPOC Objectives?
IPOB, or Social Capital Hedosophia II is the second joint venture SPAC between Social Capital and Hedosophia firms. The fund sold warrants in April 2020 selling 36,000,000 units at $10 each total a fund value of $360m that is being targeted to merge with a technology company within the United States. IPOB is currently trading on the NYSE at a price of $11.50/share
IPOC, or Social Capital Hedosophia III is the third joint venture SPAC between Social Capital and Hedosophia firms. The fund sold warrants in April 2020 for 72,000,000 units at $10 each for a total fund value of $720m that is being targted to merge with a technology company outside of the United States. IPOC is currently trading on the NYSE at a price of $11.00/share
Together the IPOB and IPOC SPAC IPOs have raised almost $1.1B in funds for technology investments led a group of successful investors in capital starved technology companies. Could they return like Virgin Galactic? Google? Facebook or Apple?
Are SPACs IPOB and IPOC a buy?
IPOB with a current price of $11.50/share is currently trading at a 15% premium to the original IPO price of $10/share, so every dollar you buy shares you are getting approximately 85% cash waiting for a US technology deal to be struck by a seasoned Silicon Valley venture capitalist with a good head on his shoulders.
The same goes for IPOC, with a current price of $11/share, the shares are trading at a 10% premium to the original IPO price of $10/share, so every dollar you buy shares you are getting approximately 90% cash waiting for a non-US technology deal to be struck by one of the world’s best technology venture capitalists.
Seems like a good opportunity if you have some extra cash lying around to potentially get involved and wait for a good opportunity to show up.
A SPAC stock is defined as a “special purpose acquisition company” sometimes called a blank-check company these are stocks with with no commercial operations that are formed to raise capital through an IPO for the purpose of acquiring an existing company.