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Chamath Palihapitiya’s special purpose acquisition company, Social Capital Hedosophia, will acquire the company in its capacity as a SPAC–a blank check company that was formed and taken public with the intention of acquiring another company.
The deal is expected to create up to $1 billion in cash proceeds and value Opendoor at about $4.8 billion, according to a statement from the companies. The $1 billion figure includes a fully committed private investment in public equity of $600 million and up to $414 million of cash that is in Social Capital Hedosophia’s trust.
Opendoor, which was founded in 2014 in San Francisco, makes it easier to buy and sell a home. The company has raised at least $1.5 billion in funding from investors including General Atlantic, Norwest Venture Partners and the Softbank Vision Fund.
“We created the IPO 2.0 platform to identify and partner with iconic technology companies with proven management teams and assist in their transition to the public markets. Opendoor perfectly embodies this vision,” Palihapitiya said in a statement. “The company is transforming the $1.6 trillion residential real estate market by combining a superior user experience, streamlined operations and machine learning to create a seamless digital experience.”
SPACs are having a record year in 2020, with more than $38 million raised by SPACs to date, according to SPAC Insider, and big companies like DraftKings and Nikola Corp. choosing to go public by merging with a SPAC. Opendoor isn’t Palihapitiya’s first rodeo when it comes to SPACs, however. He and his company helped take Virgin Galactic public through a SPAC last year.
Opendoor is currently available in 21 markets across the U.S., including Phoenix, Dallas and Atlanta.
Illustration: Dom Guzman