Venture capitalist Chamath Palihapitiya.
Mark Kauzlarich/Bloomberg via Getty Images
Chamath Palihapitiya, once dubbed Wall Street's “SPAC King,” is back with a new blank-check vehicle and a promise to do better after a bruising track record.
Palihapitiya on Monday launched the American Exceptionalism Acquisition Corp. A (AEXA), a $345 million SPAC that he said was more than five times oversubscribed, drawing $1.4 billion in demand. The vehicle, which will trade on the New York Stock Exchange, is designed to target companies in AI, energy, defense and decentralized finance.
“These are areas where I believe American entrepreneurship can still lead the world, and where a disciplined, institutionally backed vehicle can add value,” the 49-year-old the Social Capital CEO and former Facebook executive said in a post on X.
The SPAC was up 3% in early trading Tuesday.
Palihapitiya once helped ignite the SPAC boom among retail investors during the pandemic in 2020, but his first wave of deals mostly lead to poor returns. Virgin Galactic lost more than 90% of its value, while Clover Health trades around only $3 compared to the $15 peak after regulatory scrutiny and a short-seller report. Opendoor, which had fallen into a penny stock earlier this year, became a meme name supported by retail traders, but the stock is still about half of its record price in 2021.
SPACs are special purpose acquisition companies, which raise capital and use the cash to merge with a private company and take it public, usually within two years.
Improving the SPAC structure
Now, Palihapitiya said AEXA is structured differently. The SPAC will carry no warrants, and his compensation vests only if shares rise at least 50% after a deal. Meanwhile, just 1.3% of the allocation went to retail investors, he said.
“I want to temper retail investors' involvement with my SPACs,” he said. “This deal was built for institutional investors. Specifically, 98.7 percent went to large institutions, each picked explicitly by me.”
Palihapitiya's return comes as he has recast himself both politically and publicly. A longtime Democrat donor who once floated a run for California governor, he has more recently aligned with President Donald Trump's politics. At the same time, he has built a media platform through the All-In Podcast, where he and other tech investors debate politics and markets, often favoring the views of the Trump Administration.
SPACs are having a resurgence after a sharp, two-year slowdown as regulatory scrutiny, disappointing post-merger performance and rising rates dampened investor appetite. Many SPACs liquidated rather than find deals, and the once red-hot sector became a cautionary tale. Now, with traditional initial public offerings returning and the broader stock market charging ahead, dealmakers are dusting off the structure.
“No one can predict what will happen in the future so be safe out there and no crying in the casino,” Palihapitiya said.
