venture capitalist Chamath Palihapitiya.
Mark Couz Larich/Bloomberg via Getty Images
Once known as the “Spac King” on Wall Street, Chamath Palihapitiya has returned with the promise of getting better after a new blank check vehicle and bruise track record.
Palihapitiya launched the US exceptional acquisition Corp. A (AEXA) on Monday, overregistering $345 million SPAC over five times its $345 million SPAC, bringing in $1.4 billion in demand. The vehicle is traded on the New York Stock Exchange and is designed to target AI, energy, defense and distributed finance companies.
“These are areas where we believe American entrepreneurship can still lead the world, and we believe that disciplined, institutionally supported vehicles can add value,” the 49-year-old social capital CEO and former Facebook executive said in a post on X.
SPAC rose 3% in early trading on Tuesday.
Palihapitiya once helped ignite the SPAC boom among retail investors during the 2020 pandemic, but his first wave of trading led to almost poor returns. Virgin Galactic has lost more than 90% of its value, but Clover Health only trades around $3 compared to its $15 peak after regulatory scrutiny and short-term reporting. Opendoor, which was classified as Penny stock earlier this year, has become a retailer-supported meme name, but the stock is about half its record price in 2021.
SPACS is a special purpose acquisition company that raises capital and uses cash to merge with private companies, usually published within two years.
Improved SPAC structure
Now, Palihapitiya said that Aexa constitutes a different structure. SPAC does not have a warrant. His compensation is only entitled if the shares rise at least 50% after trading. Meanwhile, only 1.3% of the allocation was sent to retail investors, he said.
“We want to ease retail investors’ involvement in SPACS,” he said. “The transaction was built for institutional investors. Specifically, 98.7% went to large institutions, each one being explicitly chosen by me.”
Palihapitiya’s return comes when he recreates himself both politically and publicly. The longtime Democratic donor who once ran for the California governor has recently formed an alliance with President Donald Trump’s politics. At the same time, he built a media platform through all-in-podcasts. There, he and other tech investors discuss politics and markets, often supporting the Trump administration’s views.
SPACS is back after a sharp two-year slowdown as regulatory scrutiny, unfortunate performance after a disappointing merger, and rising rates weakened investor desire. Many spacks were settled rather than finding a deal, and the once-red-hot sector became a warning story. Now, the first traditional public products are back, and the broader stock market is charging, trading players are dusting out the structures.
“It’s safe and not crying at the casino because no one can predict what will happen in the future,” Parihapitiya said.
