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Chamath Palihapitiya unveils $4.8 billion SPAC deal for real estate startup Opendoor

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Published on Sep 15, 2020
Chamath Palihapitiya’s SPAC Social Capital Hedosophia II will acquire Opendoor, an online marketplace for buying and selling houses. Palihapitiya joins "Squawk Box" to discuss his vision for the deal. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Chamath Palihapitiya pioneered taking private unicorns public by reverse merging them into special purpose acquisition companies — an idea he’s called “IPO 2.0.”

After his first iteration of doing so last year with space-tourism company Virgin Galactic, he’s found his next target: Opendoor, an online marketplace for buying and selling houses.

“These guys are my next 10x idea,” Palihapitiya said in an interview with CNBC, noting the prospect of generating returns worth 10 times the original investment.

The investment, announced Tuesday, amounts to more than $1 billion. Opendoor will receive $414 million from the capital generated from the April initial public offering of his SPAC, Social Capital Hedosophia II. Additionally, a group of investors, including Palihapitiya and funds managed by BlackRock, agreed to infuse another $600 million through a PIPE, or a private investment in public equity.

The deal values Opendoor at $4.8 billion — nearly equal to its 2019 revenue. The company’s earlier investors include General Atlantic, SoftBank’s Vision Fund and Lennar Corp.

“This is one of many milestones towards our mission and will help us accelerate the path towards building the digital one-stop-shop to move,” Eric Wu, who founded Opendoor six years ago, said in a statement. Wu will continue to lead the company, while Adam Bain, former chief operating officer at Twitter and director at Social Capital Hedosophia II, will join the board after the transaction is completed.

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