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Opendoor In Talks to List Via Social Capital II Merger

Gillian Tan, Patrick Clark and Crystal Tse

(Bloomberg) -- Opendoor, a property technology startup, is in advanced talks to go public through a merger with Social Capital Hedosophia Holdings Corp. II, according to people with knowledge of the matter.

Social Capital II, the blank-check company led by chairman Chamath Palihapitiya, is discussing raising fresh equity to help fund the transaction with prospective investors, said some of the people, who asked not to be identified because the talks are private.

The combined company would be valued at around $5 billion in the deal, which is expected to be announced in the coming weeks, the people said. The transaction isn’t yet finalized and talks could still fall apart.

Representatives for Opendoor and Social Capital II declined to comment.

San Francisco-based Opendoor, led by Chief Executive Officer Eric Wu, buys homes digitally, makes minor repairs and lists the properties for sale, charging a fee for the service. The company was valued at $3.8 billion in a March 2019 fundraising round, and at the time said it had raised $1.3 billion from investors including Softbank Vision Fund, General Atlantic, Khosla Ventures, NEA and Norwest Venture Partners.

Opendoor is poised to be the latest venture-backed startup to merge with a special purpose acquisition company, an investment vehicle that has gone mainstream this year, offering businesses a faster route to go public.

Social Capital II, which began trading in April, has seen its stock soar in recent days. It rose 5.6% to $13.09 at 9:33 a.m. in New York Friday. The shares are up 20% this month.

Social Capital Hedosophia Holdings II is a partnership between millionaire venture capitalist Palihapitiya and longtime investor Ian Osborne. Last year, Social Capital’s first blank-check company agreed to merge with billionaire Richard Branson’s space company Virgin Galactic.

(Updates share price in second to last paragraph.)

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