CHINA – Digital healthcare startup, ETAO International Group has announced that it will go public through a merger with a blank-check company, in a deal valued at US$2.5 billion.

The transaction with Mountain Crest Acquisition Corp III will generate up to US$304 million in gross proceeds for the combined company, including a US$250 million private investment from China SME Investment Group.

In China, ETAO offers a variety of online and offline healthcare services, such as hospital and primary care, health insurance, pharmacy, and telemedicine.

Telemedicine refers to doctor consultations and other medical services provided over the internet or the phone rather than in-person visits to clinics.

ETAO stated that the funds from the deal with the special purpose acquisition company (SPAC) will be used to improve healthcare delivery amenities in its clinics and hospitals, as well as for its internet-based medical services.

SPACs are a way for companies to list on public markets without going through the time-consuming process of traditional listing — and they’ve grown in popularity in the last year.

SPACs raise funds from the public markets to purchase a private company, effectively transforming it into a publicly traded company.

Despite the recent decline in company listings via SPAC mergers, and shares of popular companies such as BuzzFeed Inc and Grab Holdings plummeting after going public, the alternative route to listing has remained popular this year.

Akili Interactive, a company that has developed video games to treat attention deficit disorders, agreed to go public earlier this week in a US$1 billion deal with a Chamath Palihapitiya-backed blank-check firm.

The ETAO merger is expected to be completed in the summer, after which the combined company will be listed on the New York Stock Exchange under the ticker symbol “ETAO.”

Meanwhile, last year, the UK’s healthtech giant, Babylon Health went public in US via SPAC merger with Alkuri Global Acquisition.

 Babylon, founded in 2013, has become one of the UK’s most successful tech companies, achieving unicorn status in 2019. It offers online consultations, which are becoming increasingly important as the healthcare industry goes digital, as well as a symptom-checking app.

But it hasn’t always been a smooth ride. Babylon has clashed with GPs in the UK and has been chastised for making bold claims about what its AI can achieve.

At the same time, it’s been used as a posterchild for digital transformation by people like UK health minister Matt Hancock, and it’s received massive funding from Saudi Arabia’s state investment fund.

In contrast to competitors such as Kry, Babylon has recently shifted its focus away from Europe. Its services currently serve 24 million people across North America, Europe, Africa, and Asia, and the company has stated that the capital raised through the transaction will help it scale in the United States.

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