Shareholders in the British healthcare app company Babylon are to be left high and dry, as one of the firm's main creditors moves to take delist it and take it private.
Babylon said earlier this week that London-based credit fund AlbaCore Capital is carrying out “a restructuring and recapitalisation” of the business.
This essentially meant that AlbaCore's loan would be extended, and as part of the deal Babylon would in effect be sold to AlbaCore and other investors.
Under AlbaCore's debt agreements with Babylon, it has the right to do this “without the approval of or any payment to” its shareholders, Babylon said,
Babylon shares have fallen by more than 83 per cent this week and are 96 per cent lower than were this time last year.
Turbulent times
It's been a turbulent time for Babylon recent — the digital healthcare company spurned London to list in the US 18 months ago, using a special acquisition company (Spac) deal.
A Spac is simply another way of bringing a company to the stock market other than a traditional initial public offering (IPO). A Spac is a shell company that raises money to buy the company that wants to list on the stock exchange.
At their peak in October 2021, Babylon shares were trading at $272.5. Yesterday, the shares closed at $1.44 — meaning more than 99 per cent of their value has been lost in the past 18 months.
Founded by British-Iranian entrepreneur Ali Parsa, Babylon's app in the UK is used by around 100,000 patients to access their GPs and other health services.
The company was praised by former British health minister Matt Hancock during the covid pandemic.
In its time, Babylon has received funding from Saudi Arabia's Public Investment Fund, Kinnevik, a venture capital group based in Sweden and data company Palantir.
In the run-up to its US listing, Babylon was valued at $4.2 billion. But despite approving the Spac deal, the vast majority of the shareholders opted to redeem their shares ahead of it, which meant the listing raised less than half the cash that had been expected.
It went downhill from there — staff were cut and NHS partnerships fade away, while losses mounted. Those losses more than doubled in the first quarter of this year to $63.2 million, compared to the previous three months.
Mr Parsa told the Financial Times last November that the period following the US flotation has been an “unbelievable, unmitigated disaster” and the company “learnt a big lesson, which is we should have done a lot more thinking through Spacs”.
