Amplitude Healthcare Acquisition Corp. Files $100M SPAC


Amplitude Healthcare Acquisition Corp. Files $100M SPAC

Oct 28, 2019 INTEL by Kristi Marvin

On Friday, Amplitude Healthcare Acquisition Corp. (AMHCU), filed for a $100 million SPAC focused on the healthcare sector.  Amplitude is being sponsored by Metalmark Capital and by Avego Healthcare Capital, two leading investment firms with a focus on the healthcare industry, and will be led by Howard Hoffen, as Chairman, and Bala Venkataraman, as CEO.

By way of background, Mr. Hoffen is the Founder, Chairman and Chief Executive Officer of Metalmark, one of Amplitude’s Sponsors, and is also the former Chairman and Chief Executive Officer of Morgan Stanley Capital Partners (MSCP).  However, Mr. Hoffen also oversaw all of the private equity businesses of Morgan Stanley, which included MSCP, but also included Venture Partners and Global Emerging Markets. Mr. Venkataraman, is a founding Partner of Avego, the other Sponsor of Amplitude. However, Mr. Venkataraman also co-founded Vidara Therapeutics (sold to Horizon Pharma in 2014), as well as Alaven Pharmaceutical (sold to Meda Pharma in 2010). So clearly this a strong team with relevant deal-making and industry experience.

Additionally, Amplitude intends to search for companies within the healthcare sector, but more specifically, the life sciences and pharmaceutical services sectors, which have been hot as of late.  In fact, I did a little digging to find out just how hot and according to a report by the law firm Wilson Sonsini Goodrich & Rosati, it found that 64 life sciences companies priced their IPOs last year, a nearly twofold increase over 2017. And looking at the first half of 2019, there were 33 life sciences IPOs. Furthermore, included in the prospectus was an interesting stat: “According to Pitchbook data, as of September 2019, there are approximately 5,200 biotechnology and pharmaceuticals companies in the U.S., only approximately 892 of which are currently publicly traded.”  So I guess they’ll have a lot choice.

Moving on to this SPAC’s structure, we see 100% in trust, 24 months, and a 1/2 warrant.  This has become the norm as of late with six of the ten SPACs on file to IPO having this exact same structure.  Furthermore, we have two more on file with a 1/2 warrant, but with 18 months duration instead.  This is because we’ve had a lot of really good teams file recently, but with the exception of Osprey Tech, they’re all first-timers and as such, are starting with a 1/2 warrant. (note: Osprey is sort of new-ish too since this will be the first SPAC for David DiDomenico, as CEO). However, Amplitude’s terms feel right on the money for this team.

Additionally, we see BMO Capital Markets, as left lead underwriter, is back in SPAC Land.  The last SPAC BMO participated in was 2015’s Hennessy Capital II, which combined with Daseke (DSKE), but they’re re-entering the game now and with a good looking team to boot.

In summary, this SPAC should have no problem generating demand.  Look for Amplitude to price mid-November.

Summary of terms below:

Amplitude Healthcare terms 10-27-19