NEW YORK: Former President Donald Trump’s new social media venture is seeking to raise up to $1 billion by selling shares to hedge funds and family offices at several times the valuation it commanded in a deal with a blank-check acquisition firm in October, two people familiar with the matter said.
Trump Media & Technology Group, which has yet to roll out the social media app it says it is developing, already stands to receive $293 million if its deal to list in New York through a merger with blank-check firm Digital World Acquisition Corp is completed.
The deal valued Trump Media at $875 million, including debt. Trump Media is now seeking to raise up to an additional $1 billion at a valuation of close to $3 billion, to reflect Digital World’s share rally after Trump supporters and day traders snapped up the stock, the sources said.
It is the clearest indication yet that Trump and the Digital World dealmakers are seeking to capitalize on the market euphoria around their venture, which has so far been fueled by its ambitious goals rather than a business that is up and running. Digital World shares were valued at $10 each in the deal with Trump Media. Trump Media is now looking to secure a so-called private investment in public equity (PIPE) that would value Digital World shares closer to their recent price, currently hovering around $40, the sources said. It is a departure from most PIPE deals, which are typically done at $10 per share, and would result in a much greater dilution of existing Digital World investors.
The sources added that Digital World shares may be valued based on a 20% discount of their 10-day, volume-weighted average price.
The sources requested anonymity because the matter is confidential. Trump Media and Digital World did not respond to requests for comment. Bloomberg News reported last month that the companies were seeking to raise a PIPE without any details on its terms.
Most PIPE transactions are inked before a deal to take a company public is rolled out, and it is far from certain that the companies will raise the entire $1 billion they are seeking following their deal announcement. Many Wall Street firms have snubbed the opportunity to invest, and many of the investors participating in the confidential road shows for the PIPE are hedge funds, family offices and high net-worth individuals, the sources said. Family offices manage the wealth of the very rich and their kin.