Editing Babylon Holdings Limited
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<small>During 2020 and 2021, there was a huge surge in the use of SPACs due to excessive liquidity that had arisen from the pandemics over-expansive monetary policy. A key player in the then exponentially growing telemedicine market, Babylon looked to capitalise on its position as soon it could. SPACs offer a significantly faster time to market than traditional routes which seemed most applicable for Babylon at the time. Ultimately, this decision lead to a sharp demise in investor confidence as the share price has dropped 99.99% since IPO.</small> | <small>During 2020 and 2021, there was a huge surge in the use of SPACs due to excessive liquidity that had arisen from the pandemics over-expansive monetary policy. A key player in the then exponentially growing telemedicine market, Babylon looked to capitalise on its position as soon it could. SPACs offer a significantly faster time to market than traditional routes which seemed most applicable for Babylon at the time. Ultimately, this decision lead to a sharp demise in investor confidence as the share price has dropped 99.99% since IPO.</small> | ||
Ahead of its stock market debut, Babylon was valued at $4.2bn, set to receive $575mn from the merger with the SPAC, Alkuri Global. Typically | Ahead of its stock market debut, Babylon was valued at $4.2bn, set to receive $575mn from the merger with the SPAC, Alkuri Global. Typically with SPACs, shareholders have the option to redeem their shares prior to the business combination, for a pro-rata share of the funds in the investment trust. Since the SPAC target company often hasn’t been identified when the SPAC is formed, this procedure incentivises investors who may be worried about risks involved. On the date of the merger, 90% of shareholders chose to redeem their shares despite having all voted to approve the deal. As a result, Babylon was left with just $275mn in cash, $300mn less than originally calculated. To make up for this shortfall, Babylon had to cut staff, cancel two existing NHS contracts early and raise $80mn in additional cash – a disaster. | ||
Shortly after going public, the share price of Babylon Holdings LTS, under the ticker BBLN, peaked at $272.50 with a market cap of over $3.5billion. On the day of writing, it sits at $0.0331 with a market cap just under $850k. | Shortly after going public, the share price of Babylon Holdings LTS, under the ticker BBLN, peaked at $272.50 with a market cap of over $3.5billion. On the day of writing, it sits at $0.0331 with a market cap just under $850k. |