Wednesday, January 19

Donald Trump raises $ 1,000M for his social network. His political brand still attracts strongly

Donald Trump’s new social media company confirmed over the weekend that it had signed deals to raise about $ 1 billion from a group of unidentified investors. It is now preparing to list on the United States stock market.

The financial operation underscores the ability of the former president of the United States to attract strong financial support thanks to his personal and political brand. Trump is working to launch a social media app called TRUTH Social, which will take at least several more weeks to launch.

Digital World Acquisition, the SPAC that will bring Trump Media & Technology Group to the floor in New York, will provide up to $ 293 million to the partnership with Trump’s media company, bringing total earnings to approximately $ 1.25 billion.

A SPAC valued at $ 4 billion serves as a platform for Trump’s social network

The new $ 1 billion will be raised through a private investment in public equity (PIPE) transaction from “a diverse group of institutional investors,” Trump Media and Digital World confirm in a statement. They did not respond to press requests to identify the investors involved.

Trump Media signed its deal with Digital World to go public in October with a valuation of 875 million, including debt. The social media company is now valued at nearly $ 4 billion based on Digital World’s share price at the end of Friday’s trading. Trump supporters and intraday investors have taken the bulk of the shares.

Many Wall Street firms, such as funds and private equity firms, turned down the opportunity to invest in the Trump project. Investors who do participate in the SPAC include hedge funds, family offices and large American fortunes, Reuters reported Wednesday.

Some Wall Street investors are reluctant to partner with Trump.

The former president was kicked out of major social media platforms after the January 6 attack by his supporters on the United States Capitol. The attack on the Capitol was based on unsubstantiated claims of widespread fraud in last year’s presidential election.

“As our balance sheet expands, Trump Media & Technology Group will be in a stronger position to fight the tyranny of Big Tech,” Trump signed in a statement Sunday.

The US CNMV is silent

The deal also faces regulatory risks. US Senator Elizabeth Warren (Democratic Party) asked Securities and Exchange Commission Chairman Gary Gensler last month to investigate Trump’s operation for possible violations of securities laws.

The SEC (the US CNMV), for its part, has declined to comment on whether it plans any action.

Trump Media and Digital World confirmed that the conversion price per share of the PIPE transaction of convertible preferred shares represents a discount of 20 percent to the volume weighted average closing price of Digital World for the five business days prior to March 1. December.

If that price averages less than $ 56 in the 10 days after the Digital World merger ends, the discount will increase to 40 percent capped at $ 10, the companies added. Shares of Digital World ended up trading at $ 44.97 on Friday.

Trump had 89 million followers on Twitter, 33 million on Facebook and 24.5 million on Instagram at the time he was blocked, according to a presentation on his company’s website.

Investors who attended the confidential investor road shows were shown the beta version of Trump’s social media app. Some sources describe it as a Twitter feed, Reuters reported.

Trump will also compete against Amazon and Google

Since Trump was removed from office last year, he has repeatedly hinted that he could run for president of the United States in 2024.

SPACs like Digital World had lost much of their luster in front of retail investors before the Trump deal came along. Many of these investors amassed large losses after the companies that merged with the SPACs failed to meet their ambitious financial projections.

TRUTH Social is scheduled for a full launch in the first quarter of 2022. It is the first of three stages of the Trump Media plan, followed by a video-on-demand subscription service called TMTG +, which will feature entertainment, news and podcasts, according to a press release.

In a presentation on its website, the company plans to eventually compete against Amazon’s AWS cloud service and Google Cloud.

A report by Juby Babu in Bengaluru and Krystal Hu in New York; edited by Daniel Wallis and Cynthia Osterman; edited for by Ismael GarcĂ­a