‘Spac King’ Chamath Palihapitiya returns with a new blank-cheque vehicle
Investor known for his high-profile role in the 2021 Spac boom plans to list a new company
Self-described “Spac King” Chamath Palihapitiya is launching a new special purpose acquisition vehicle, marking his return to blank-cheque companies after playing a leading role in the pandemic-era boom that quickly turned to a bust.
The former Facebook executive was a prominent proponent of Spacs in 2020 and 2021, launching more than 10 of his own as investors poured billions of dollars into the broader market to fund exotic projects including flying taxi groups and companies hoping to commercialise space travel.
The fervour died because of rising interest rates in 2022, with most of the Spacs launched four years ago — including a majority of those backed by Palihapitiya — having fallen in value since they began trading.
But Spacs have made a comeback this year as market volatility sparked by Donald Trump’s tariffs has weighed on traditional initial public offerings.
Palihapitiya jumped on the bandwagon on Monday, two months after asking people on X if he should return to the market.
Despite more than 70 per cent of the 57,864 people who responded to the X poll voting “no”, Palihapitiya later said he would “probably” launch a Spac anyway.
His new vehicle, American Exceptionalism Acquisition Corp, hopes to raise $250mn in an IPO that would entail it being listed on the New York Stock Exchange under the symbol AEXA, according to a preliminary prospectus filed with US regulators.
Spacs are shell companies with no underlying operations that list on a stock exchange and then combine with a private business, allowing a back door for private groups to become publicly traded without an IPO.
In a letter addressed to “the friends and supporters” of Social Capital, the venture capital firm he founded in 2011, Palihapitiya said “the biggest gains in the future will come from companies that are involved in fixing the fundamental risks that come from our interconnected global order while reinforcing American exceptionalism”.
He suggested companies in energy production, artificial intelligence, cryptocurrencies and defence would be among those on his Spac’s radar.
Social Capital did not immediately respond to a request for comment.
Palihapitiya has in recent months railed against the “opacity” of traditional IPOs, hitting out at banks for mispricing companies whose shares surged on their first day of trading.
“While Spacs are not the solution for every issue in the IPO process, I continue to believe that they have an important piece to play in capital formation — and especially now,” he said in his letter.
“Without doubt, the investment will entail substantial risk including the possibility of total loss,” Palihapitiya added. Retail investors should only consider investing if they could bear losses on speculative investments, he cautioned.
“[If] they do lose their entire capital, they will embody the adage from President Trump that there can be ‘no crying in the casino’,” he said.