Connect with us


Merger with Richard Branson’s Spac values 23andMe at $3.5bn



Richard Branson’s publicly listed special acquisition purpose company has agreed to merge with 23andMe, valuing the genetics testing group at about $3.5bn.

23andMe is the latest company to go public via a merger with a Spac, as an increasing number of private companies prefer the less burdensome route to a traditional initial public offering.

The Silicon Valley-based company will trade on the New York Stock Exchange by reverse-merging with the British entrepreneur’s VG Acquisition, which raised $480m in October to hunt for consumer-facing businesses.

Under the terms of the transaction, VG Acquisition will inject $509m in cash into 23andMe, while a group of investors will provide an additional $250m via a private placement. Sir Richard and Anne Wojcicki, 23andMe’s chief executive, will contribute $25m each to the private placement. Other institutional investors include Fidelity, Altimeter Capital, Casdin Capital and Foresite Capital.

Once the deal is complete, existing 23andMe shareholders will own 81 per cent of the company, which will trade under the ticker symbol “ME” on the NYSE.

Over the past 12 months, a wave of Spacs have been launched as sports stars, celebrities, industry titans and retired politicians have enthusiastically backed Wall Street’s latest trend despite the historically poor performance of these vehicles. 

Sir Richard said in an interview with the Financial Times that Spacs “cut through a lot of red tape”. He said he had a great experience with the Virgin Galactic Spac in 2019, where he combined his space tourism venture with the blank-cheque company of Chamath Palihapitiya, the former Facebook executive who has become a poster child of the recent Spac frenzy. 

Ms Wojcicki said she had previously been resistant to going public, since she likes to know her investors.

“Partnering with Richard, that was the slam dunk,” she told the FT. “Richard Branson is the pioneer of thinking big. You couldn’t ask for bigger.”

“We’re trying to transform healthcare, and that is a long-term vision. It’s not overnight,” she said. “There’s definitely bumps in the road.”

Since Ms Wojcicki co-founded the company in 2006, it has faced numerous challenges, including concerns about privacy hitting growth in the sales of consumer genetic tests, and regulatory scrutiny about allowing patients to access the information they might not understand.

Revenues at 23andMe shrunk from $441m in the fiscal year 2019 to $305m in 2020, according to an investor presentation. The company projected revenues of $218m in the 2021.

23andMe, a pioneer of direct-to-consumer genetic testing, has recently shifted its focus to using its research database — the largest in the world — for drug discovery. In partnership with the UK drugmaker GSK, it is exploring over 30 drug development programmes, Ms Wojcikci said.

Sir Richard said he was aware that developing a drug can involve significant money and time — as long as seven or eight years. “I think that with the genetic information, Anne hopefully can do it in three to four years, and that can mean that can make a hell of a difference to the economics of finding new drugs,” he said.

Sir Richard was a series A investor in 23andMe, which was founded in 2006. He said has used the service for information on his health and genealogy, including discovering an Indian ancestor.

Virgin also has consumer-focused healthcare brands including Virgin Pulse, an employee wellness platform, and Virgin Active, a global chain of gyms.

Ms Wojcikci said Covid-19 had made people more interested in learning about how to take care of their health. 23andMe recently launched a subscription service, offered to the 10m members that have already taken the test, to give them more data.

“The end goal for us is healthy at 100,” she said, pointing to Tom Moore — the UK pensioner who raised money for the NHS by walking around his garden and who died this week at the age of 100 — as the model.

Sir Richard said people in his family tend to live to 100 already, so he is aiming for 110.

“I’m expecting her to deliver on this, but equally I have no wish to live to 110 if I’m not healthy and fit and still winning on the tennis court,” he said.

VG Acquisition received financial advice on the deal from Credit Suisse and LionTree, and legal advice from Davis Polk & Wardwell. Meanwhile, 23andMe was advised by Citi on financials and Morgan, Lewis on legal.

Additional reporting by Miles Kruppa

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Darktrace/UK IPOs: shoes for every occasion




Unpredictable nature of listing process means ‘greenshoes’ will remain required footwear

Source link

Continue Reading


Global IPOs begin 2021 at breakneck pace




Listings on stock markets around the world are running at a record pace, with both deal numbers and values at their highest levels for the start of any year in at least two decades.

This year, 875 initial public offerings each raising at least $1m have been clinched globally, according to data from Dealogic that cover the last 26 years. That figure far outstrips the previous record set in the final months of the dotcom boom in 2000, when 592 companies raised $1m or more in floats over the same time period.

The deluge of listings has lifted IPO proceeds to a record-setting $230bn this year, well above the previous peak of $80bn set in 2000.

The boom stems largely from a spree of flotations of shell companies known as special purpose acquisition companies, or Spacs, which have accounted for almost half of the fundraising haul through IPOs in 2021. Spacs have no underlying business and instead raise capital to pursue a merger with a privately held business.

But the rise in IPOs also reflects enduring demand for global listings in a year when markets have rallied to new highs, with marquee names such as South Korean ecommerce company Coupang and US dating app Bumble making public debuts.

Globally, proceeds from IPOs in 2021 have already surpassed the full-year totals for 21 of the past 26 years.

Column chart of Number of IPOs, by type showing The number of companies going public has ballooned

“The numbers are encouraging because they’re evidence that people have renewed confidence that public markets are a good way to exit their business,” said Carlton Nelson, co-head of corporate broking at Investec. “It shows that they don’t have to tap into private capital despite it being easier and more efficient than it has been for a long time.”

The listings have been heavily tilted to the US, where Spacs had flourished before running into trouble in recent weeks. Roughly two-thirds of the $230bn of capital raised this year has been through listings in the country. China and Hong Kong have trailed in distant second and third places as the preferred choice for new listings, accounting for 8 per cent and 5 per cent of IPO proceeds, respectively.

Column chart of Global initial public offering proceeds ($bn) showing Companies and Spacs have raised $230bn through IPOs in 2021

Among the big debuts already this year have been SoftBank-backed Coupang, which along with selling shareholders raised $4.6bn, and TikTok’s video-sharing rival Kuaishou, which raised $6.2bn in its Hong Kong listing. Food delivery app Deliveroo also made headlines with its London IPO, which raised $2bn for the company and early backers but was ultimately panned by new investors.

Other large listings are already in the queue, including entertainment group Endeavor, Jessica Alba’s consumer goods business Honest Co and stock trading app Robinhood.

The data do not include direct listings, where companies decline to raise capital when they go public, meaning cryptocurrency exchange Coinbase’s blockbuster debut on the Nasdaq earlier this month is not counted in the figures.

Chris Nicholls, who leads Deloitte’s UK IPO and equity advisory team, said he believed the rest of the year looked promising for a spate of new listings.

“As you see economies emerging from lockdown, there should be a period of strong [economic] growth, which bodes well for this wave continuing for a while longer,” he added.

A key question is how much air will come out of the Spac phenomenon, which ballooned in popularity last year but has “slowed meaningfully” in recent weeks, according to strategists with Goldman Sachs.

Bar chart of Cash raised through initial public offerings, by company nationality ($bn) showing Roughly two-thirds of IPO proceeds have been raised in the US

Staff of the Securities and Exchange Commission earlier this month promised closer scrutiny of the revenue and profit projections from companies that use the vehicles to go public, and the number of new Spac listings has plummeted.

Still, the global economic reopening after the coronavirus pandemic is likely to prompt companies to pursue flotations, Investec’s Nelson said.

“IPOs have a long gestation period, it’s not just when the starting gun has been fired,” he added. “It’s really encouraging to see companies of all shapes and sizes starting those conversations now, even if it’s for a few years’ time in the future.”

Source link

Continue Reading


Pepco and Poundland chains target multibillion valuation in IPO




South African conglomerate Steinhoff is set to raise up to 4.6bn zlotys ($1bn) when it lists its Pepco chain of discount retailers in Warsaw this month in the latest in a series of asset sales.

Pepco, which operates about 3,200 stores in countries including Poland, Romania and Hungary, as well as Poundland in the UK, said on Wednesday that shares in the offering would be priced between 38 zlotys and 46 zlotys.

In total, Steinhoff and members of Pepco’s management team will sell 102.7m shares or 17.9 per cent of Pepco to the public, valuing the company at between 21.9bn zlotys and 26.5bn zlotys. The final price will be set on May 14, and trading will begin on May 26.

A portion of shares will also be placed directly with some of Steinhoff’s lenders, following an earlier agreement between the conglomerate and its creditors.

Andy Bond, the former Asda chief executive who now runs Pepco, intends to sell more than 1m shares in the IPO, worth roughly €9.7m at the midpoint of the price range, though he will be subject to a lock-up period until the end of 2023 thereafter.

Bond said the company planned to open a further 8,000 stores “over the longer term”, but would also keep “a clear focus on costs and delivering additional efficiencies as we grow”.

Pepco’s listing is likely to be one of the biggest this year on the Warsaw exchange, which has seen a flurry of activity since Poland’s dominant ecommerce platform Allegro raised 9.2bn zlotys last year in the country’s largest initial public offering

Steinhoff will initially retain a stake of about 82 per cent, but the group is looking to sell assets to reduce debt after an accounting scandal in 2017. 

It has already sold Bensons for Beds, another UK retailer, to private equity group Alteri, and has an option to sell a further 15.4m shares in Pepco in the offering if investors show sufficient interest. Goldman Sachs and JPMorgan are advising on the IPO.

Pepco’s business heartland is in central Europe, but the group is planning to expand elsewhere on the continent, such as Spain, and is targeting earnings before interest, tax, depreciation and amortisation of more than €1bn within the next “five to seven years”.

In the year to the end of September, it reported sales of €3.5bn and underlying ebitda of €229m. Ebitda was almost a third lower than in the previous 12 months, as the pandemic forced stores to close across Europe.

Like many other discount retailers, Pepco does not trade online, as the small size of the purchases typically made by its customers makes the economics of ecommerce difficult.

The group said last week that sales had risen 4.4 per cent in the six months to the end of March, thanks to the opening of more than 200 new stores. However, on a like-for-like basis, sales were down 2.1 per cent.

Source link

Continue Reading