Babylon IPO: How SPACs are increasingly becoming the favoured tool for new launches

Summary 

  • Babylon Health to launch in the markets through a SPAC IPO.
  • Alkuri Global Acquisition is the SPAC acquiring Babylon Health.
  • The deal would give $4.2 billion pro forma equity value to Babylon.

Babylon Health, a UK health tech startup, is the latest among new entrants planning for an initial public offering (IPO) through a SPAC (special purpose acquisition company) deal. SPACs have become increasingly popular in the last one year.

Companies wanting to go public without the onerous process of a normal listing are choosing SPACs, who raise money from markets to acquire a private company, thereby making it a publicly traded company.

Alkuri Global Acquisition - headed by Rich Williams, former Groupon boss — is the SPAC acquiring Babylon Health. The deal would give $4.2 billion pro forma equity value to Babylon. The combined company would be trading under the ticker BBLN on NASDAQ and would be known as Babylon.

Launched in 2013, the London-headquartered startup provides affordable and accessible healthcare through a unique combination of doctors with AI. Babylon hopes to remodel the $10-trillion healthcare market to make healthcare preventive than reactive. Things like telehealth had a slow 40 per cent patient adoption before the pandemic. However, now more than 60 per cent opt for online doctor consultations.

For funding Babylon’s pro forma balance sheet, the deal would also bring in $575 million in gross proceeds. It would include cash up to $345 million to be kept in the trust account of Alkuri Global, assuming no redemptions. Its balance sheet would also be having $540 million net cash which would be utilised to take up for attractive acquisitions as well as to formulate strategies for organic growth.

Babylon’s public float comes in the backdrop of European tech floats gaining momentum after a slow 2020. Several tech successes from Europe have raised record growth rounds recently and there is a vast number of European tech firms that have IPO potential. But it has also been pointed out by experts that several promising launches are happening in the US, and Europe is missing out on the opportunities.

How to buy Babylon IPO shares?

Pre-listing, an investor can trade in the shares of Alkuri Global Acquisition. After the merger takes place, the Alkuri shares would automatically be converted into Babylon shares. After the listing is completed, investors can take a position on Babylon’s shares.

The process of acquiring shares would be similar to purchasing shares of any other company. An investor can open an investment account with any trusted online stockbroker. Online platforms allow trading depending on the shareholders’ instructions, and they do not give any advice on their platforms.

Another way of acquiring shares would be through buying share CFDs online. Unlike normal shares, CFD shares do not give dividends or voting rights.

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