Babylon Reaches $4.2 Billion Deal With Ex-Groupon CEO’s SPAC

(Bloomberg) -- Babylon Holdings Ltd., the medical startup that connects patients and doctors via an app, is going public via a merger with a blank-check company run by former Groupon Inc. executives.

Alkuri Global Acquisition Corp. is raising about $230 million from investors including Palantir Technologies Inc. in a private placement to support the deal, according to a statement Thursday. The transaction implies an equity value of about $4.2 billion for Babylon and is expected to close in the second half of 2021.

New backers including Swedish pension fund AMF Pensionsforsakring, health care-focused investor Sectoral Asset Management and Scandinavian asset manager Swedbank Robur are participating in the private placement. The deal is expected to deliver as much as to $575 million of gross proceeds to Babylon, according to the statement.

“We have achieved one of the highest growth rates every year since our inception, with consistently high clinical outcomes and patient satisfaction,” Babylon Chief Executive Officer Ali Parsa said in the statement. “Becoming a public company is just another step in our journey.”

Bloomberg News reported last week that Babylon was nearing an agreement with Alkuri. Babylon will trade on the Nasdaq under the symbol “BBLN” after the deal closes, Thursday’s statement shows.

Founded in 2013, Babylon’s app lets users schedule a video chat with a doctor, check symptoms or book time with specialists, such as therapists. It can be used to seek advice and treatment for conditions ranging from hair loss to chronic kidney disease, according to its website.

The U.K.’s National Health Service lets patients choose Babylon’s “GP in Hand” mobile consultation service as their official primary care provider, and the startup last year said its artificial intelligence software, in tests, can assess common conditions more accurately than human doctors.

However, the startup’s patient-facing AI symptom checker has been the target of criticism that it’s capable of missing serious health problems.

In 2019, Babylon raised $550 million in a funding round valuing the business at more than $2 billion. Its backers include Saudi Arabia’s Public Investment Fund, Munich Re Ventures, Kinnevik AB, NNS Holding, the family office of Nassef Sawiris, and Vostok New Ventures.

Kinnevik said Thursday it would invest $5 million as part of Babylon’s private placement, bringing its ownership after the transaction closes to 13%. Babylon also confirmed it would acquire the remaining shares of consumer health engagement startup Higi, which it invested in as recently as May last year.

Alkuri is a special purpose acquisition company led by Groupon’s ex-chief executive officer Rich Williams and former chief operating officer Steve Krenzer, who left those roles last year after turnaround plans for the online discount provider faltered. Sultan Almaadeed, a former executive at the Qatar Investment Authority, is Alkuri’s chairman.

Ardea Partners LP and Citigroup Inc. advised Babylon on the deal, while Alkuri worked with Jefferies Financial Group Inc., according to Thursday’s statement. Jefferies, Citigroup and Pareto Securities AB acted as placement agents for the private investment in public equity, or PIPE, offering.

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