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 *


Rocket Lab/Spire Global: Spacs, the final frontier




Life sometimes imitates emojis. Social media stock tipsters are fond of littering posts with rocket symbols. Rocket Lab, which is floating at a $4.1bn enterprise value, makes the real thing. It was one of two space-related businesses to join the market via special purpose acquisition companies (Spac) on Monday, as the surge in these listings continued.

Just two months into the new year and Wall Street has raised a staggering $58bn through 188 blank cheque vehicles, according to Refinitiv. With hot money appearing to outweigh the supply of merger candidates, sponsors are howling to the moon for deals.

Rocket Lab launches smaller satellites into space. Its celestial twin was Spire Global, a satellite data group that is combining with a Spac at a $1.6bn equity valuation.

Like many recent Spac companies, Rocket Lab and Spire are justifying their valuations with lofty sales and earnings growth projections. Rocket Lab, which generated $35m in revenues last year, said it expected to pull in more than $1.1bn in 2026 and become cash flow positive in 2024. Spire, with just $28m in sales in 2020, is forecasting $900m in revenue by 2025 and positive cash flow in three years’ time.

Tesla founder Elon Musk and his SpaceX rocket company have reignited investor interest in US space companies. Annual revenues from space-related business — at present worth $350bn — could almost triple in size by 2040, according to Morgan Stanley.

SpaceX was reportedly valued at $74bn by its latest private funding. Shares in Virgin Galactic, Richard Branson’s space tourism company, have almost doubled since last September to give it a $9bn valuation, even as the group reported a $273m loss in 2020.

Space companies are a moonshot borne aloft by the rocket fuel of cheap money. That momentum trade has more to recommend than some others, such as fledgling electric vehicle companies. Both Rocket Lab and Spire have proven technologies to accomplish highly demanding tasks. This really is rocket science. But like space exploration itself, these investments are only for the brave.

If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button ‘Add to myFT’, which appears at the top of this page above the headline

Source link

Continue Reading


Coinbase’s offering docs have just dropped [Update]




Just when you thought you’d seen it all in SEC filings, along comes the Coinbase prospectus. Which is really a direct listing. But who can tell during these days of ICOs and ITOs what a public offering even is.

The cryptocurrency platform which aims to “create an open financial system” is planning to go public via a Direct Listing on the Nasdaq in the near future. The docs dropped an hour ago.

While we dig through the paperwork, we thought we’d just share this gem from the “Definitions” page — the section of an IPO prospectus dedicated to those terms erstwhile investors might not have heard of.

Won’t you look at that:

Hodl: A term used in the crypto community for holding a crypto asset through ups and downs, rather than selling it.

There’s also an excellent use case (with our emphasis):

Borrow & Lend. We allow our U.S. retail users to borrow against and lend their crypto asset portfolios. Our first product is a portfolio-backed loan: a flexible, non-purpose 12-month term loan that allows retail users to borrow U.S. dollars using their crypto assets as collateral. Secured by their investment portfolio, customers can use the line of credit to access U.S. dollars while maintaining a “hodl” investing strategy. Over time, we plan to offer our retail users the ability to opt into lending their crypto assets to earn a passive return on their long term investments.

This is otherwise known in the real financial world as . . . a basis trade.

Meanwhile, Izzy has been pointing out some other curiosities on Twitter:

We’d also add this, which Preston Byrne on Twitter pointed out:

Satoshi as a risk factor, who’d have thought?

More tomorrow, we’ve not even got to the financials yet.

Source link

Continue Reading


Coinbase files to become first listed major US cryptocurrency exchange




Coinbase, the largest US-based cryptocurrency exchange, revealed the scale of its business for the first time in paperwork for a long-awaited public listing that comes during a booming market for bitcoin and other digital coins.

Coinbase generated $1.3bn in revenue last year, up from $534m the year prior, enabling the company to turn a profit of $322m in 2020 after losing $30m in 2019, according to a filing with US securities regulators.

The company’s public debut, the first for a large US cryptocurrency exchange, is likely to rank as one of this year’s largest new tech listings and would mark a milestone for backers of the emerging sector. Coinbase is aiming to list in late March, said one person familiar with the company’s thinking.

Public investors have recently bought up shares in new market entrants such as Airbnb and DoorDash, fuelling a surge in public listings that has drawn comparisons to the 2000 dotcom bubble.

Coinbase filed for a direct listing rather than a traditional initial public offering, meaning it will not raise additional capital when it goes public.

Brian Armstrong, chief executive of Coinbase, warned that prospective investors should expect volatility in the company’s financials.

“We may earn a profit when revenues are high, and we may lose money when revenues are low, but our goal is to roughly operate the company at break even, smoothed out over time, for the time being,” Armstrong wrote in a letter attached to the filing.

Almost all of Coinbase’s revenue came from transaction fees last year, it said in the filing, underlining the company’s dependence on cryptocurrency trading fees.

Shares in the company have recently changed hands in private markets at prices that would give it a roughly $100bn valuation, according to people briefed on the trades, up from $8bn less than three years ago.

Coinbase could use those trades, in addition to input from public investors and its financial advisers, to determine its opening price on public markets.

Coinbase quickly grew into a favoured destination for cryptocurrency traders after it emerged from the Y Combinator start-up programme in 2012. It has recently touted services designed for large institutional investors and a series of acquisitions expanding its reach into software products for cryptocurrency developers.

The company said institutional activity made up almost two-thirds of its total trading volume in the fourth quarter, when transaction revenues jumped more than 70 per cent from the previous quarter to $476m. It said it had 2.8m monthly transacting users in 2020, almost tripling from the year prior.

Coinbase said it oversaw about $90bn in total assets stored on the platform, representing more than 11 per cent of the total market for cryptocurrencies at the end of last year. It has also made venture capital investments in more than 100 companies.

As trading volumes exploded this and last year, the cryptocurrency market has attracted increasing scrutiny from lawmakers and regulators, including over concerns about digital coins being used for money laundering.

In its filing, Coinbase noted the “extensive and highly evolving regulatory landscape” was a risk factor, and that its obligations to comply with various regulations would only increase as the exchange continued to expand internationally.

Among the company’s biggest investors, controlling more than 5 per cent of stock each, are Andreessen Horowitz, Paradigm, Ribbit Capital, Tiger Global Management, and Union Square Ventures.

Goldman Sachs, JPMorgan, Allen & Co and Citigroup are advising Coinbase on the direct listing.

Source link

Continue Reading