You are currently viewing UK’s Babylon Health to go public via $4.2B SPAC deal; fully acquires Chicago-based Higi

UK’s Babylon Health to go public via $4.2B SPAC deal; fully acquires Chicago-based Higi

London-based Babylon Holdings Limited, a digital health service provider, has announced its plans to go public. It has merged with a special purpose acquisition company, Alkuri Global Acquisition Corp. With this development, the initial pro forma equity value of Babylon would be approx $4.2B (approx €3.46B).

The transaction is expected to close in the second half of 2021. Upon closing of the transaction, the combined company will operate as Babylon and plans to trade on Nasdaq under the new symbol “BBLN”.

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Transaction overview

The development will expectedly offer $575M (approx €474.57M) in gross proceeds to fund Babylon’s pro forma balance sheet, including the funds of $345M (approx €284.7M) in cash held in Alkuri Global’s trust account. Besides, $230M (approx €189.8M) in funding is supported through PIPE.

This funding was provided by over 85 per cent from new, external institutional investors including AMF Pensionsförsäkring, Sectoral Asset Management, and Swedbank Robur with strategic investor Palantir – at $10.00 per share. The investment also saw participation from Babylon’s Founder CEO Ali Parsa, Alkuri Sponsors, and existing Babylon investors Kinnevik and VNV.

Existing Babylon shareholders will roll 100 per cent of their equity into the combined company and will own approx 84 per cent of the pro forma company at closing. 

This development will see Babylon retain its management team. Dr. Ali Parsa will continue to serve as CEO and Chairman of the Board. In addition, an Alkuri Global representative will join the Babylon Board of Directors.

Dr. Parsa, Founder & CEO of Babylon, says, “We founded Babylon on a fundamental belief, that it is possible to make quality healthcare accessible and affordable for every person on earth by combining the latest in technology and the best in medical expertise. We have achieved one of the highest growth rates every year since our inception, with consistently high clinical outcomes and patient satisfaction. Becoming a public company is just another step in our journey. We are at the very beginning of our work to re-imagine our sector, to make it digital-first and prevention-first and shift the focus away from sick care to true health care.”

Accessible and affordable healthcare for everyone

Founded in 2013, Babylon claims to be a digital-first, value-based care company, with a mission to provide accessible and affordable quality healthcare for everyone. It has built a suite of tools, designed around a doctor’s brain, using Artificial Intelligence (AI) – “It’s what makes us so different from other healthcare providers,” mentions the company on its website.

The company believes it is reengineering healthcare by shifting the focus from sick care to preventative healthcare so that patients experience better health. This is achieved by leveraging a scalable, digital-first platform combined with quality, virtual clinical operations to provide all-in-one, personalised healthcare. It works with governments, health providers, and insurers across the globe, and supports healthcare facilities from small local practices to large hospitals. 

Babylon has also reported that it scaled 5 times its annual revenue growth in 2020, and is expected to grow by 4 times in 2021, covering millions of people across four continents. The company mentioned that it has achieved strong traction in the US market and is focused on scaling its operations in the country. 

How does Babylon help patients?

Babylon’s AI system can efficiently read, comprehend, and learn from anonymised, aggregated, and medical datasets – but only when patients give consent to use their health information in this way. And then, a set of AI tools can help make decisions about triage, causes of symptoms, and future health predictions. “We provide assistance to navigate the health system, connecting patients digitally to the right clinician 24/7, at no additional cost,” said Babylon in a statement.

The company helps patients through its two primary channels:

  • Babylon 360 – a digital-first value-based care service
  • Babylon Cloud Services – a suite of digital self-care tools that enables patients and clinicians to gain insights and information

Together, those services cover 24 million people across the US, Canada, Europe, Africa and 13 countries in Asia. In 2020, the company claimed to have helped one patient every five seconds with approx 6 million patient interactions. Moreover, Babylon has a 95 percent user retention rate. The capital raised from the current transaction will help the company to further expand its services both with existing and new customers.

To acquire Higi?

Babylon is expected to raise a total of about $540M in net cash, to pursue organic growth strategies and acquisitions. The company, which had previously acquired an equity stake in Higi – a consumer health engagement company, is now looking to acquire the rest of the stake in the company.

Founded in 2012 by Khan Siddiqui and Michael W. Ferro Jr, Higi’s mission is to get consumers to take small but meaningful steps to create lasting health habits. The company is the maker of health kiosks found in retail pharmacies and groceries. Its stations provide free screenings of blood pressure, weight, pulse and body mass index. According to the company, more than 10,000 of these kiosks have so far been used by 62 million people, and are located within five miles of 73 per cent of the US population.

Higi’s major investors including 7wire Ventures, Flare Capital Partners and William Wrigley, Jr., have agreed to accept shares in lieu of a portion of cash consideration if Babylon confirms to acquire Higi. This agreement is expected to reduce Babylon’s cash needs by approx $40M.

About Alkuri Global Acquisition Corp.

It is a blank check company formed for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganisation or similar business combination with one or more businesses or entities. 

Alkuri Global intends to favour next-generation technology businesses led by visionary founders and teams leveraging data and artificial intelligence in the areas of consumer internet and marketplaces, healthtech, fintech, and mobility.

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