On his podcast, Chamath Palihapitiya said: ‘Every time I say that I care about the Uyghurs, I’m really just lying.’ He later acknowledged that he came across as ‘lacking empathy’ © Mark Kauzlarich/Bloomberg
A special purpose acquisition vehicle backed by tech investor Chamath Palihapitiya has agreed to merge with a healthcare company focusing on kidney disease, the latest move by the dealmaker who stirred controversy this week by saying “nobody cares” about the repression of Muslim Uyghurs in China.
Palihapitiya has been a prolific sponsor of Spacs, launching 10 blank-cheque vehicles to capitalise on booming demand. The latest deal between his Social Capital Suvretta III Spac and ProKidney, a therapeutics company focusing on treating chronic kidney disease, values the combined company at $2.64bn.
It is expected to provide $825m in proceeds, including $250m from Palihapitiya’s Spac, which listed on the Nasdaq stock exchange in June.
The deal has $575m in private investment in public equity financing, $125m of which is from Palihapitiya’s venture capital firm Social Capital. Palihapitiya said chronic kidney disease affected his late father and that the merger will provide ProKidney with the capital to continue phase 3 trials into its cell therapy treatment.
The deal comes a day after Palihapitiya stoked controversy by saying on his podcast that “nobody cares what’s happening with the Uyghurs” in China. “Every time I say that I care about the Uyghurs, I’m really just lying,” he said.
Companies and investors are facing renewed pressure ahead of the Beijing Winter Olympics after the US and UK announced a diplomatic boycott of the event in response to China’s persecution of the Uyghurs in its north-western Xinjiang region.
The US state department has accused China of “genocide and crimes against humanity” in its treatment of the Uyghurs.
Beijing has denied allegations of mistreatment and encouraged boycotts against foreign companies, such as apparel retailer H&M, that have spoken out against the use of forced labour in the region.
Palihapitiya, who owns a stake in the NBA’s Golden State Warriors, later said that human rights mattered. “I recognise that I come across as lacking empathy,” he said after the Warriors said Palihapitiya did not represent their views.
The World Uyghur Congress, an international advocacy group, said it was “appalled” by the tech investor’s comments. “It’s absolutely sickening and despicable that someone with a great reach would say he doesn’t care about an ongoing GENOCIDE,” Zumretay Arkin, a programme manager at the human rights group said on Twitter.
A spokesperson for the Warriors said in a statement: “As a limited investor who has no day-to-day operating functions with the Warriors, Mr Palihapitiya does not speak on behalf of our franchise, and his views certainly don’t reflect those of our organisation.”
Palihapitiya’s comments drew backlash from Republicans politicians who said they had exposed his hypocrisy as well as the NBA’s.
Marsha Blackburn, a Republican senator from Tennessee, described his comments as “sickening” and “proof the NBA will cosy up to Communist China at all costs”.
Mitt Romney of Utah said that the “arrogant dismissal of China’s genocide of the Uyghurs and other minorities by the billionaire venture capitalist who founded the ironically named ‘Social Capital’ fund is repulsive, immoral, and disgusting”.
Tom Cotton, a Republican senator from Arkansas, said the NBA “will prove itself greedy, spineless, and hypocritical if it doesn’t force Palihapitiya to sell his interest in the Warriors”.
Palihapitiya, along with his co-sponsor Kishen Mehta, is set to make $62.5m from the so-called promote of the Spac, according to Spac Research data.
Spac sponsors are paid in the form of founder shares, known as a promote, which typically involves taking 20 per cent of the Spac’s equity for a nominal price of $25,000. When the Spac merger is completed, the sponsor’s deeply discounted shares convert.
The deal marked the fifth merger for Palihapitiya’s Spacs, with others including Richard Branson’s space tourism company Virgin Galactic and healthcare company Clover Health. Investor enthusiasm for Spacs has subsided from last year’s frenzied highs as regulatory scrutiny increased.
Investors have withdrawn their cash at higher rates and Spac withdrawals have risen in recent months as some sponsors struggled to find suitable target companies to take public.
Additional reporting by Sara Germano in New York and Edward White in Seoul