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When former President Donald J. Trump’s fledgling social media company and merger partner announced in December that they had secured an additional $1 billion in private funding for the deal, investors speculated about their identities.
Who were the nearly three dozen investors who bet on the success of the former president’s new company? Were they big Wall Street names? Political supporters of Mr Trump? technology and media funds sold under the promise right wing Alternative to Twitter?
A draft document shared with The New York Times about the $1 billion investment called “private investment in public equity,” or PIPE, sheds some light. In such an arrangement, an investor exchanges cash for shares that are then registered by the company for sale on the open market.
According to the document, the investors are mostly a mix of small and medium hedge funds based in the United States and Canada. The draft was circulated among investors on Tuesday, and two people briefed on the matter said a final version is expected to be submitted to regulators Thursday, although timing could change.
Hedge funds Pentwater Capital and Sabby Management are two of the largest investors in private placement. The Times previously reported. According to the draft document, Naples, Fla. Funds associated with Pentwater, a $10 billion hedge fund headquartered, will receive the most stake through the deal.
Other major investors include Anson Funds Management, Kershner Trading Americas, K2 & Associates, Yorkville Advisors and MMCAP. While they may not be household names, some are well known in the hedge fund world for making PIPE investments that often have lucrative terms. Many of Wall Street’s biggest hedge funds opportunity passed because they were concerned about the optics of teaming up with Mr Trump.
At least two of the investors on the list were not yet known.
A major investor is an organization called Truth SPC. The name appears to be a reference to Truth Social, a Twitter-like flagship product of Mr. Trump’s company, Trump Media & Technology Group. But online searches, including US company records, did not reveal any assets by that name.
Another large investor whose right to use is uncertain is called Red Rowan Investments. the company appears to be included In the Cayman Islands in December.
The $1 billion private settlement is a critical financing element for the proposed deal between Trump Media and Digital World Acquisition, a “blank check” or special purpose buyout company that went public in September. Digital World raised nearly $300 million in its initial public offering.
Investors in private placement are not required to roll over any funds until the Securities and Exchange Commission approves the merger. When that happens, investors will collectively buy tens of millions of shares in the post-merger company, according to the draft document.
The SEC is investigating whether certain communications between Trump Media and Digital World violated the rules before their deal was announced.
Patrick Orlando, CEO of Digital World, did not respond to requests for comment, and Trump Media representatives did not.
Truth Social got off to a rough start. Mr Trump has only recently started sending messages regularly to his nearly three million followers. He previously had around 90 million followers on Twitter platform fired him last year.
Billionaire entrepreneur Elon Musk, who recently made an offer to buy Twitter, said he would allow it. Mr Trump is back on the platform if the deal closes. Mr Trump said he plans to stay at Truth Social. But Mr Trump signed a new licensing deal with Trump Media opens the door for him posting political messages on Twitter as well, if the social network lifts the ban.
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