MSP Recovery, which helps recover money from Medicare and Medicaid secondary payments, will go public through a deal with a blank-check firm, giving the combined company an enterprise value of $32.6 billion in the second biggest SPAC merger.
The deal with Lionheart Acquisition Corp II is expected to fetch $230 million in proceeds for MSP, it said on Monday.
MSP, led by billionaire entrepreneur John Ruiz, specializes in the recovery of Medicare and Medicaid payments. Its platform can be used to identify and recover claims its clients “should never have paid”, according to its website.
The Florida-based company, founded in 2014, earns a fee after a successful recovery.
Special purpose acquisition companies, or SPACs, are shell companies that raise funds through an initial public offering to take a private company public through a merger at a later date.
Lionheart raised $230 million in an initial public offering in August. The company’s shares were up 5.2% at $10.40 in trading before the bell.
At $32.6 billion, the merger is second in size only to the nearly $40 billion deal inked in April between Southeast Asia’s Grab and Altimeter Growth Corp.
The MSP deal is also the largest since the U.S. Securities and Exchange Commission said it was considering new rules to protect investors amid a surge in the use of SPACs as capital-raising vehicles.
It also pointed to a rebound in merger activity in the blank-check space after Wall Street’s appetite showed signs of waning following a period of frenetic deal-making using the investment vehicle.
In the past few months, biotech company Ginkgo Bioworks and SoftBank-backed mortgage startup Better HoldCo have announced multi-billion dollar deals with blank-check vehicles.
Lionheart stockholders who do not redeem shares of its common stock will be issued more than 1 billion warrants in connection with the merger, the company said.
MSP’s founders will sell an equivalent number of their shares back to the company so that the provision won’t dilute the stock’s value.
MSP will list on Nasdaq under the ticker symbol “MSPR”.
Keefe, Bruyette & Woods served as the financial adviser to MSP, while Nomura Securities advised Lionheart.
Reporting by Noor Zainab Hussain, Niket Nishant, Sneha Bhowmik and Juby Babu; Editing by Shailesh Kuber and Sriraj Kalluvila