Palantir becomes aggressive with PSPCs and invests in Babylon Health
A pedestrian walks past a banner displaying Palantir Technologies signage during the company’s initial public offering (IPO) at the New York Stock Exchange (NYSE), September 30, 2020.
Michael Nagle | Bloomberg | Getty Images
Last year around this time, Palantir was getting ready for his long awaited debut on the stock market. Today, the developer of data analysis software has become a major investor in other tech companies that are preparing themselves for public procurement.
Palantir’s latest investment was announced on Thursday, when Babylon Health said it was become public through an ad hoc acquisition company. A group of investors, including Palantir, have pledged to invest a total of $ 230 million in the Babylon transaction.
Palantir has now agreed to at least six PSPC agreements in less than three months. A PSPC is a blank check company that raises funds to buy a private entity through a reverse merger and go public with the help of funding from additional investors. By participating in PIPE, or private investment in public shares, Palantir is guaranteed ownership of a certain number of shares once the transaction closes and the shares of the operating company begin to trade.
While many tech companies like Google, Selling power and Intelligence have large venture capital groups that support start-ups at different stages, Palantir’s focus on PSPCs is unique among strategic investors. This means that Palantir is betting on more mature companies that are often already valued in the billions of dollars.
PSPCs have entered the market at a tremendous rate over the past year as an alternative to IPOs. However, the market has cooled in recent times due to regulatory concerns and a general pullback in tech stocks. the CNBC SPAC 50 index, which tracks the 50 largest US-based pre-merger blank check transactions by market cap, has fallen nearly 4% year-to-date, while the Nasdaq has gained nearly 6%.
Beyond financial returns, Palantir is looking for innovative companies in major markets that can use its data tools.
Palantir has supported businesses ranging from drug discovery to robotics and air travel. Last week he teamed up with General Motors in a $ 100 million investment Wejo, a UK developer of connected vehicle data systems. In March, he agreed to invest $ 41 million in Lilium, an air taxi company developing an electric vertical take-off and landing plane with seven seats.
“We see an opportunity to support great management teams with great visions,” said Kevin Kawasaki, Business Development Manager at Palantir. The company can partner up and “allow them to have our data operating systems platform in which we have invested 15 years and billions of dollars in R&D,” he said.
Palantir’s software helps government agencies and large corporations collect, analyze, and visualize large amounts of disparate data. The company grew up serving the public sector and was best known for providing software and services to intelligence agencies. It has since spread to the commercial sector, which accounted for nearly 40% of the turnover of the first quarter.
Since its direct listing on the New York Stock Exchange in September, Palantir’s shares have more than doubled in value, bringing the company’s market capitalization to $ 39 billion.
Babylon CEO Ali Parsa said Palantir’s investment was part of a longer-term partnership between the two companies. Babylon is working with health insurers and governments to provide a way for them to provide mobile services to patients, who have much easier and cheaper access to health care providers, whether for primary care, health care emergency or a specific procedure.
Parsa founded the company in 2013. Until recently, her main focus was on Europe, but also had deals with governments like Rwanda, where Babylon helps provide access to primary care for citizens. In 2020, it launched the service in the United States and, mainly through partnerships with insurers, quintupled revenues last year. He expects 80% of revenue to come from the United States in 2021.
Babylon Health Home Screen
Source: Babylon Health
The PSPC deal values Babylon Health at around $ 4.2 billion and is expected to close in the second half of this year.
Where Palantir’s technology can help, Parsa said, is by providing his company and customers with more advanced means to analyze individual patients to know when they may need to take action or request a referral. specific help. It’s similar to how companies use Palantir to know precisely when their products need an upgrade or a refresh, he said.
“With healthcare, one of the biggest challenges is the massive amount of data generated by the human body that is really not being used well at all,” Parsa said.
Parsa said product discussions with Palantir were ongoing before any discussion of a PSPC emerged.
“After that, they said they liked the business and wanted to be an investor in the process,” Parsa said.
Palantir invests considerable resources in the health aspect of its activity. Last month he hired Dr. Bill Kassler, formerly of IBM Watson Health, as the first chief medical officer of the United States government. The Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health are all clients of Palantir.
His efforts to work with the UK’s National Health Service on a Covid data collection project has drawn criticism from activist groups concerned about privacy.
Babylon Health is Palantir’s first digital health SPAC, but the company has had others in life sciences. On May 1, he agreed to invest $ 30 million in PSPC for the drugmaker Roivant Sciences. Palantir said in his quarterly report that as part of the deal, Roivant signed a five-year subscription contract for products and services.
Shyam Sankar, chief operating officer of Palantir, said during the first quarter earnings call that the company is partnering with Roivant to “work across its portfolio on drug discovery and development.” .
Four days after Roivant’s announcement, Palantir announced that it would invest $ 20 million in PSPC to Cellularity, a clinical-stage biotechnology company. This agreement also includes a five-year subscription to Palantir products.
“With Celularity, we will help accelerate the science around their breakthrough cell therapies and cutting edge biotechnology that focuses on translating biology into medicine,” Sankar said on the call.
Between April and May, Palantir was involved in two other PSPC investments outside of life sciences, according to its quarterly report.
The company has agreed to invest $ 21 million in the deal to Sarcos robotics, which manufactures industrial robot systems. On May 11, Palantir agreed to put $ 20 million in a “mobility company” that she did not name on the record. These two agreements also included multi-year subscription agreements.