Shareholders in Babylon, a British healthcare start-up that soared in popularity during the pandemic, are set to be wiped out as the company’s main lender is poised to take control of the business.
Babylon said on Wednesday that London-based credit fund AlbaCore Capital is carrying out “a restructuring and recapitalisation” of the business.
As part of the deal, AlbaCore will amend terms of an existing $300mn loan it provided to Babylon while also extending $34.5mn of fresh funding. Babylon said its core operating business will be transferred to “AlbaCore and other investors”.
Babylon said the sale will take place “without the approval of or any payment to” its shareholders because AlbaCore will be “exercising rights under its debt agreements”. Shares have fallen by more than 80 per cent since Tuesday.
The move will see the digital healthcare company return to private ownership after a tumultuous 18 months of trading in which its shares have plummeted 99 per cent.
It caps a difficult period for Babylon, which had been championed by former health minister Matt Hancock during the pandemic as “revolutionary” for health services and grew rapidly through partnerships with the National Health Service.
Founded in 2013 by British-Iranian entrepreneur Ali Parsa, Babylon Health’s GP at Hand app is used by around 100,000 patients in the UK to access NHS general physicians virtually, acting as their primary care provider.
The company previously received investment from Saudi Arabia’s sovereign wealth fund, Swedish venture capital group Kinnevik and data company Palantir. It spurned a London listing in favour of going public in New York via a special purpose acquisition company in October 2021.
Ahead of the listing, Babylon was valued at $4.2bn and was set to receive $575mn from its merger with a blank-cheque company Alkuri Global. But when the date to vote on the merger approached, around 90 per cent of shareholders asked to redeem their shares despite approving the deal, which left Babylon with only $275mn in cash.
Amid the funding shortfall, the company has cut staff, cancelled NHS partnerships and attempted to sell off parts of its business. Net losses have continued to grow, more than doubling to $63.2mn in the three months to the end of March, compared to $29.1mn in the previous quarter.
Parsa in November described the company’s performance since its flotation as an “unbelievable, unmitigated disaster” but said he was committed to reaching profitability.
Last year, Babylon issued a reverse share spit to narrowly avoid delisting after its shares failed to maintain an average closing share price of at least $1 over a consecutive 30 trading-day period.
AlbaCore had previously supplied a $30mn bridging loan to Babylon in March, around two months of working capital, according to companies house filings and first reported by the Telegraph. It first provided a $200mn loan in 2021.
Parsa did not respond to a request for comment.
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