U.S. Markets

Home-selling platform Opendoor closes higher in Nasdaq debut

(Reuters) -Shares of Opendoor Technologies Inc, a home-selling platform backed by SoftBank Group, ended 5.9% higher in their Nasdaq debut on Monday, following a merger with a blank-check company led by investor Chamath Palihapitiya.

Opendoor, which earlier this year had agreed to combine with Palihapitiya’s Social Capital Hedosophia II, closed at $31.25, up from Social Capital’s last close on Friday before it began trading under its new name.

The stock is trading well above the $10 share price at which Social Capital sold shares in an April initial public offering, which raised $360 million.

Social Capital is a special purpose acquisition company (SPAC), which is a shell company that raises money through an IPO to buy a private company and take it public.

Opendoor said in a filing on Friday it had 544.4 million outstanding shares after the merger, giving it a market capitalization of $17 billion at its closing price.

The company, backed by a $400 million investment from SoftBank, was hit hard by the pandemic this year, and cut 35% of its workforce in April.

As the home resale business started to recover, Opendoor looked for capital to fuel expansion and opted to go public by merging with Social Capital at a $4.8 billion valuation.

The company got about $1 billion cash in the deal, including $600 million from Palihapitiya and other investors including BlackRock and Healthcare of Ontario Pension Plan.

Glenn Solomon, a board member at Opendoor and a managing partner at GGV Capital, one of Opendoor’s early investors, said the company’s goal had always been to go public.

“This is a consumer service and the notoriety of being public is helpful. This is also a company that relies on capital, both from its partners and its balance sheet, to execute on its business plan,” Solomon said.

Reporting by Sohini Podder in Bengaluru and Joshua Franklin in Miami; Editing by Sriraj Kalluvila and Vinay Dwivedi