Social Capital Hedosophia Holdings Corporation II

Social Capital Hedosophia Holdings Corporation II

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Opendoor Labs Inc.


ESTIMATED CURRENT FUNDS in TRUST: $414.2 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.00*
IMPLIED ENTERPRISE VALUE: $4.8 billion

*SPACInsider estimate

Social Capital Hedosophia Holdings Corp. II proposes to combine with Opendoor Labs Inc., a leading digital platform for residential real estate, offering an on-demand, digital experience to buy and sell a home. Opendoor enables homeowners to sell and buy online in a few taps of a button, providing greater simplicity, certainty and convenience than ever before. Since its founding, the Company has served over 80,000 customers and sold over $10 billion of homes. In 2019, the company sold more than 18,000 homes, generating $4.7 billion in revenue.

Homeowners can go online to request and accept an offer, select their preferred closing date, sign and close. This collapses the entire house selling process into a few simple steps and removes up to 100 days of hassle and uncertainty. Home buyers can download the Opendoor app, tour and visit homes instantly with self-tours, get financing at competitive rates, and make an offer, all with just a mobile device. Collectively, Opendoor has built a simple, elegant, on-demand buying and selling experience.

Opendoor currently operates in 21 markets across the U.S., including cities such as Phoenix, Dallas-Fort Worth, Raleigh-Durham, Atlanta and Orlando. Given the demand for a digital way to buy and sell a home and the much needed digitization of services around the home, Opendoor plans to grow market share in existing markets, expand to new markets and launch new products that make real estate transactions even more seamless.

The Company’s management team, led by Founder and CEO Eric Wu, will continue to lead Opendoor. SCH’s Director, Adam Bain (former Chief Operating Officer of Twitter), will join the merged company’s Board of Directors upon completion of the transaction.

Highlights

  • The transaction will enable Opendoor to continue to invest in growth, market expansion and new products that will accelerate Opendoor’s plan to become a digital one-stop shop for homeowners
  • The transaction values Opendoor at an enterprise value of $4.8 billion, and is expected to provide up to $1.0 billion in cash proceeds, including a fully committed PIPE of $600 million and up to $414 million of cash held in the trust account of Social Capital Hedosophia Holdings Corp. II (“SCH”)
  • Insiders are making a significant commitment of $200 million of the $600 million PIPE. This $200 million commitment includes $100 million from Chamath Palihapitiya, Founder and CEO of SCH, $58 million from Hedosophia, with the remainder invested by existing Opendoor shareholders, Access Industries and Lennar, along with Opendoor management
  • Top-tier institutional investors anchoring the remaining $400 million of PIPE investments include funds and accounts managed by BlackRock and Healthcare of Ontario Pension Plan (HOOPP)
  • 100 percent of cash proceeds will be retained by Opendoor, with existing shareholders of Opendoor rolling 100 percent of their equity into the combined company

TRANSACTION OVERVIEW

  • The business combination values Opendoor at an enterprise value of $4.8 billion, representing 1.0x 2019 revenue.
  • The transaction is expected to deliver up to $1.0 billion of gross proceeds, including the contribution of up to $414 million of cash held in SCH’s trust account from its initial public offering in April 2020.
  • The transaction is further supported by a $600 million PIPE at $10.00 per share, with $200 million from entities affiliated with SCH, including $100 million from Chamath Palihapitiya, Founder and CEO of SCH, $58 million from Hedosophia, and the remainder from existing Opendoor shareholders, Access Industries and Lennar, along with Opendoor management.
  • New investors to Opendoor via additional PIPE contributions include funds and accounts managed by BlackRock and Healthcare of Ontario Pension Plan (HOOPP).
  • Existing Opendoor shareholders have agreed to roll 100 percent of their equity into the new company.
  • Upon completion of the transaction, Opendoor expects to have up to $1.5 billion in cash on its balance sheet to fund operations and support new and existing growth initiatives. All references to cash on the balance sheet, available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public shareholders of SCH and payment of transaction expenses.

SOCIAL CAPITAL HEDOSOPHIA II TRANS SUMMARY 9-15-20

SOCIAL CAPITAL HEDOSOPHIA II TRANS SUMMARY 9-15-20 page 2


PIPE

  • 60,005,000 shares of the SCH Common Stock for an aggregate purchase price equal to $600,050,000 million of SCH Common Stock for an aggregate purchase price equal to $600 million
    • $200 million from affiliated entities, led by
      • $100M from Chamath Palihapitiya
      • $58M from Social Capital Hedosophia
      • Remainder invested by existing Opendoor shareholders, Access Industries and Lennar, Along with Opendoor management
    • $400 million from additional institutional investors, including:
      • Blackrock
      • Healthcare of Ontario Pension Plan (HOOPP)

NOTABLE CONDITIONS TO CLOSING

  • The amount of cash available is at least equal to or greater than $550,000,000 (provided, that there is a mutual condition that the Trust Amount plus the Third Party PIPE Investment be at least $200,000,000),
    • after deducting the amount required to satisfy SCH’s obligations to its shareholders (if any) that exercise their rights to redeem their SCH Class A Ordinary Shares, but prior to payment of:
      • any deferred underwriting commissions being held in the Trust Account and
      • any transaction expenses of SCH or its affiliates) (the “Trust Amount”)
    • plus, the PIPE Investment

NOTABLE CONDITIONS TO TERMINATION

  • By either SCH or Opendoor in the event of certain uncured breaches by the other party or if the Closing has not occurred on or before 180 days after the date of the Merger Agreement (the “Agreement End Date“).

ADVISORS

  • Connaught acted as financial advisor to SCH.
  • Credit Suisse acted as capital markets advisor and placement agent to SCH.
  • Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to SCH.
  • Citi acted as financial advisor to Opendoor.
  • Latham & Watkins LLP acted as legal advisor to Opendoor.

SOCIAL CAPITAL HEDOSOPHIA II MANAGEMENT & BOARD


Executive Officers

Chamath Palihapitiya, 43
Chief Executive Officer & Chairman

Mr. Palihapitiya founded Social Capital in 2011 and has been its Managing Partner since its inception. Mr. Palihapitiya served as the Chief Executive Officer and the Chairman of the Board of Directors of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019, and continues to serve as the Chairman of the Board of Directors of Virgin Galactic. Mr. Palihapitiya also served as a director of Slack Technologies Inc. from April 2014 until October 2019. Prior to founding Social Capital in 2011, Mr. Palihapitiya served as Vice President of User Growth at Facebook, and is recognized as having been a major force in its launch and growth. Mr. Palihapitiya was responsible for overseeing Monetization Products and Facebook Platform, both of which were key factors driving the increase in Facebook’s user base to more than 750 million individuals worldwide. Prior to working for Facebook, Mr. Palihapitiya was a principal at the Mayfield Fund, one of the United States’ oldest venture firms, before which he headed the instant messaging division at AOL. Mr. Palihapitiya graduated from the University of Waterloo, Canada with a degree in electrical engineering.


Ian Osborne, 36
President & Director

Mr. Osborne is the Co-founder and Chief Executive Officer of Hedosophia, an investment firm, which has invested in leading Internet and technology companies since 2012. Mr. Osborne served as a director of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019. Mr. Osborne has advised leading Internet and technology companies, their founders and CEOs, since 2009. Mr. Osborne is also the indirect controlling shareholder and a director of Connaught, a financial advisory firm. From 2010 to 2012, Mr. Osborne was a Partner and Managing Director at DST Global, a family of funds investing in Internet companies, which was established in 2009 and which has notable successes including Alibaba, Airbnb, Facebook, Spotify and Twitter. Mr. Osborne was educated at St Paul’s School, King’s College London, and the London School of Economics.


Steven Trieu, 41
Chief Financial Officer

Mr. Trieu is a Partner and the Chief Financial Officer of Social Capital, an affiliate of the company’s sponsor, since October 2017 and is responsible for overseeing the operations of Social Capital’s family of funds, management company and related entities. Mr. Trieu served as the Chief Financial Officer of IPOA from March 2019 until the consummation of its business combination with Virgin Galactic in October 2019. Prior to joining Social Capital, Mr. Trieu was VP of Finance at Quora, Inc. from October 2011 to June 2016, where he was responsible for its day-to-day finance and legal operations. Prior to that, Mr. Trieu was Director, Finance and Business Operations at Facebook, Inc. from August 2007 to October 2011. Mr. Trieu led the formation of its initial business operations and sales finance teams. Mr. Trieu also previously held a similar role at Yahoo!, Inc., supporting its local markets and commerce divisions. Before that, Mr. Trieu spent time on Wall Street both as an investment banking and alternative investments associate. Mr. Trieu graduated from the University of Massachusetts, Amherst with a degree in finance and economics.


Simon Williams, 39
General Counsel & Secretary

Mr. Williams has been Hedosophia’s Chief Administrative Officer since March 2017. Mr. Williams served as the General Counsel and Secretary of IPOA from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019. Prior to joining Hedosophia, Mr. Williams was legal counsel at Balderton Capital, a London-based venture firm focused on backing European-founded technology companies, from January 2015 to March 2017. Prior to working at Balderton Capital, Mr. Williams was an associate in the London offices of each of Covington & Burling LLP and Morrison & Foerster LLP. Mr. Williams is a solicitor, qualified in England & Wales, having attended Nottingham Law School. Mr. Williams holds an MA and BA from the University of Nottingham.


 

Board of Directors

Adam Bain, 46
Director 

Mr. Bain served as a director of IPOA from September 2017 until the consummation of its business combination with Virgin Galactic in October 2019, and continues to serve as a member of Virgin Galactic’s Board of Directors. Mr. Bain is a co-managing partner of 01 Advisors, a venture capital firm targeting high-growth technology companies that are making the transition from building a product to building a company, since co-founding the firm in January 2018. Since November 2016, Mr. Bain has also been an independent advisor and investor in select growth-stage companies. Previously, Mr. Bain was the Chief Operating Officer of Twitter from September 2015 until November 2016, and President of Global Revenue & Partnerships from 2010 to September 2015, where he was responsible for the business lines at the public company, building one of the fastest revenue ramps of a consumer internet business past $2 billion in history. Mr. Bain oversaw 2,500 employees in 20 countries ranging from Product teams, Business Operations, Business Development and Media Partnerships, Developer Relations, Twitter’s International business, and all of the go-to-market Sales teams for the advertising and data businesses. Previously, Mr. Bain was the President of the Fox Audience Network at Newscorp, responsible for monetizing all of Fox’s digital assets. He started his career running product and engineering teams at Fox Sports and the Los Angeles Times. Mr. Bain earned his Bachelor of Arts in English Journalism from Miami University, in Ohio.


Cipora Herman, 46
Director 

Ms. Herman has served on the board of directors of ZipRecruiter since October 2018, where she is Chairperson of the audit committee and also is a member of the compensation committee. Since April 2015, she has served on the board of directors of memery, inc., a privately held, technology startup. She served as a member of the board of directors of Mindbody, Inc. from October 2016 until it was acquired by affiliates of Vista Equity Partners Management, LLC in February 2019. From February 2017 until June 2018, Ms. Herman served as chief financial officer of Ampersand Technologies, Inc., a social e-reader platform. Ms. Herman served as chief financial officer for the National Football League’s San Francisco 49ers for four seasons. Prior to joining the 49ers organization, Ms. Herman was the vice president of finance and treasurer at Facebook, Inc., where she worked from September 2007 to October 2012. In addition, from June 2003 to September 2007, Ms. Herman served in various finance positions at Yahoo! Inc., including most recently as vice president of finance and treasurer. She holds an A.B. in International Relations, an M.A. in International Development Policy, and an M.B.A., all from Stanford University.


David Spillane, 44
Director 

Mr. Spillane is a California licensed Certified Public Accountant and a Fellow of the Institute of Chartered Accountants in Ireland. He works as an advisor to high net worth individuals, and is involved in investing and advising seed stage companies. Mr. Spillane previously served as the Chief Accountant at Stripe, Inc., a private high growth financial payments company operating globally. Prior to that, Mr. Spillane was the Chief Accounting Officer at Facebook, Inc. (“Facebook”) from 2009 to 2013, responsible for global accounting and control operations and helping Facebook through its initial public offering in 2012. From 1997 to 2009, Mr. Spillane spent 12 years at Ernst & Young LLP in Dublin, Ireland, San Jose, California and San Francisco, California where he served in the audit practice at all levels up to senior manager. Mr. Spillane holds a Bachelor of Commerce degree from University College Dublin and a Master’s degree in Accounting from the Smurfit School of Business at University College Dublin.