Beleaguered healthtech Babylon has agreed a deal to take the company private again, which will see existing shareholders lose hundreds of millions of dollars.
Today it announced plans to form a new entity with Swiss digital therapeutics unicorn MindMaze. MindMaze will inject new funds into the business and pay off some of its debt. The transaction is expected to be completed in July.
The deal follows a torrid 18 months on the New York Stock Exchange that’s seen the British company’s share price drop more than 99%.
Babylon has been trying to plug a $300m shortfall since its botched SPAC listing in October 2021. Despite cutting headcount, abandoning contracts and soliciting new cash injections from investors, it didn’t succeed.
The move follows weeks of speculation after London-based debt funder Albacore Capital announced in May it would “restructure and recapitalise” Babylon unless it could find a buyer or drum up extra funds.
Shareholders didn’t have a say in the decision under the terms of existing debt agreements with AlbaCore. It lent Babylon $30m in March, on top of an existing $200m loan in 2021, and an extra $34.5m last month.
Swedish investors will lose out big time. VCs Kinnevik and VNV Global, Swedish pension fund AMF and Swedish investment fund Swedbank Robur will see their 42% stake in Babylon wiped out. Saudi Arabia’s Public Investment Fund will lose the whole value of its 12% stake.
Founder and CEO Ali Parsa will also lose his 19.5% stake, but will stay on at the company and head up the Babylon portion of the business within MindMaze.
Update 14.13: The article previously stated that it wasn't clear what would happen to Ali Parsa's shares. Babylon have since confirmed that Parsa would also lose his stake when the company ceases trading on the NYSE.
