Thursday evening, CHP Merger Corp. (CHPMU), filed their $250 million SPAC for IPO, focusing on the healthcare and healthcare related industries. CHP will led by Joseph Swedish, as Chairman, and James Olsen, as CEO and Director. Both Mr. Swedish and Mr. Olsen have considerable experience in the healthcare field as both operators and deal makers.
Mr. Swedish, in particular, has some very recognizable names on his CV. Notable previous experience includes being the former Chairman, President and CEO of Anthem, Inc., the largest for-profit managed health care company in the Blue Cross Blue Shield Association. A quick search on the Google machine will bring back high praise for his tenure at Anthem and that while CEO, Anthem’s membership grew by four million, or 11 percent. Additionally, the average share price nearly quadrupled from approximately $60 per share to $250 per share. Furthermore, Mr. Swedish is a co-founder of Concord Health Partners, LLC (the “CHP” in CHP Merger Corp.), a healthcare investment firm, along with Mr. Olsen (also a co-founder). Prior to founding Concord in 2017, Mr. Olsen was Managing Director & Head of Not-for-Profit Healthcare Investment Banking at Jefferies Group LLC. So once again, we have a nice pairing of an operator and deal-maker, which has generally yielded great SPAC combination results.
With the team’s credentials in mind, let’s look at the terms. This is a 24 months, 100% in trust, 1/2 warrant structure, but even though they are not opting for the 1/3 warrant of A++ teams, they’ve added an extra bell and whistle befitting their top notch backgrounds. That is, CHP can call their warrants at $10.00 for shares, plus $0.10 per warrant, which is a very “A++ term”. However, like many of the recent SPACs that have filed to IPO (which many have also been high quality teams), they are new to SPACs. As such, they are debuting with the investor-friendly strategy of including a 1/2 warrant. Which is interesting because only six months ago, anybody who was “anybody” insisted they needed a 1/3 warrant. But now, it’s almost the opposite. There’s more bravado in saying a 1/2 warrant versus a 1/3 is not going to be a hindrance to bringing a great SPAC combination. To quote Blazing Saddles (or Treasure of the Sierra Madre if you’re more high-class) it’s more like, “1/3 warrant?! We don’t need no stinkin’ 1/3 warrant”.
Lastly, we also have a VERY tier-1 underwriting team. This is JP Morgan’s first left lead SPAC, but it’s an auspicious debut. And not only that, but we have Credit Suisse on the underwriting team (always a SPAC powerhouse) and Morgan Stanley, which recently hired Goldman’s SPAC banker. As a result, CHP should be an easy sell with big-time demand. Look for this SPAC to price just ahead of Thanksgiving.
Summary of terms below:
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