Babylon Reaches $4.2 Billion Deal With Ex-Groupon CEO’s SPAC

Babylon Holdings Ltd., the medical startup that connects patients and doctors via an app, is going public via a merger with a blank-check company run by former Groupon Inc. executives.

Alkuri Global Acquisition Corp. is raising about $230 million from investors including Palantir Technologies Inc. in a private placement to support the deal, according to a statement Thursday. The transaction implies an equity value of about $4.2 billion for Babylon and is expected to close in the second half of 2021.

New backers including Swedish pension fund AMF Pensionsforsakring, health care-focused investor Sectoral Asset Management and Scandinavian asset manager Swedbank Robur are participating in the private placement. The deal is expected to deliver as much as to $575 million of gross proceeds to Babylon, according to the statement.

“We think we have an opportunity to build one of the world’s largest companies in one of the world’s largest sectors,” Babylon Chief Executive Officer Ali Parsa said in an interview. “Six months ago when we started being bombarded by SPACs, it was the best thing since sliced bread and today it’s just not the flavor of the month. For us they still remain a very efficient, fast way of going public and achieving the results – of going public.”

Bloomberg News reported last week that Babylon was nearing an agreement with Alkuri. Babylon will trade on the Nasdaq under the symbol “BBLN” after the deal closes, Thursday’s statement shows.

Founded in 2013, Babylon’s app lets users schedule a video chat with a doctor, check symptoms or book time with specialists, such as therapists. It can be used to seek advice and treatment for conditions ranging from hair loss to chronic kidney disease, according to its website.

The U.K.’s National Health Service lets patients choose Babylon’s “GP in Hand” mobile consultation service as their official primary care provider, and the startup last year said its artificial intelligence software, in tests, can assess common conditions more accurately than human doctors.

However, the startup’s patient-facing AI symptom checker has been the target of criticism that it’s capable of missing serious health problems.

In 2019, Babylon raised $550 million in a funding round valuing the business at more than $2 billion. Its backers include Saudi Arabia’s Public Investment Fund, Munich Re Ventures, Kinnevik AB, NNS Holding, the family office of Nassef Sawiris, and Vostok New Ventures.

Kinnevik said Thursday it would invest $5 million as part of Babylon’s private placement, bringing its ownership after the transaction closes to 13%. Babylon also confirmed it would acquire the remaining shares of consumer health engagement startup Higi, which it invested in as recently as May last year.

Parsa said that while Babylon’s current growth expectations don’t factor in future acquisitions, the company could look for additional growth through deals that give it access to technology, distribution or more customers. The company expects to see “significant growth” in 2022 from contracts that it’s agreeing to currently, Parsa said.

Alkuri is a special purpose acquisition company led by Groupon’s ex-chief executive officer Rich Williams and former chief operating officer Steve Krenzer, who left those roles last year after turnaround plans for the online discount provider faltered. Sultan Almaadeed, a former executive at the Qatar Investment Authority, is Alkuri’s chairman.

“We see this as really the future of what health care can be especially in a health-care market that’s broken and embarrassingly so,” Williams said in an interview. “Our view is that it’s a space that’s ripe for disruption. For too long we’ve tolerated this idea that quality and affordability can’t be balanced in health care. With Babylon we see opportunity to partner with a team that we think can deliver that balance.”

Ardea Partners LP and Citigroup Inc. advised Babylon on the deal, while Alkuri worked with Jefferies Financial Group Inc., according to Thursday’s statement. Jefferies, Citigroup and Pareto Securities AB acted as placement agents for the private investment in public equity, or PIPE, offering.

©2021 Bloomberg L.P.

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