When former US President Donald Trump’s new social media company and its merger partner announced in December that they had raised $1 billion in additional private funding for the deal, the announcement sparked speculation about the investors’ identity.
Who were the 35 or so investors who were betting on the success of the former president’s new company? Were they big names on Wall Street? Political supporters? Tech and media funds that believe in the promise of a right-wing alternative to Twitter?
A draft of the investment document – called “private investment in a publicly traded company”, or Pipe, for its acronym – sheds some light. In this type of business, the investor exchanges cash for shares that are later registered by the company for sale on the open market.
Investors are primarily a mix of small and medium sized hedge funds based in the US and Canada. The draft was circulated to investors on Tuesday, and two people briefed on the matter said a final version should be presented to regulators on Thursday (26).
Hedge funds Pentwater Capital and Sabby Management are two of the biggest investors in private placement. Funds associated with Pentwater, a $10 billion hedge fund based in Naples, Florida, are expected to get the most shares, according to the preliminary filing.
Other major investors include Anson Funds Management, Kershner Trading Americas, K2 & Associates, Yorkville Advisors and MMCAP. While not famous names, some are known among hedge funds for making investments in Pipe, which often have lucrative terms.
Many of Wall Street’s biggest hedge funds turned down the opportunity out of fears about the prospect of joining Trump. At least two of the investors on the list were not yet known.
A big investor is Truth SPC. The name appears to be a reference to Truth Social, a flagship product of Trump Media & Technology Group and a kind of Twitter lookalike. But online searches, including US corporate records, have not turned up any entities by that name. Another investor whose beneficial ownership is unclear is Red Rowan Investments, which appears to have been created in the Cayman Islands.
The $1 billion investment is a crucial element of the proposed deal between Trump Media and Digital World Acquisition, a “blank check,” or special-purpose takeover company, which went public in September. Digital World raised nearly $300m through its initial public offering.
Investors are not required to hand over any money until the Securities and Exchange Commission (SEC) approves the merger. Once that happens, investors will receive tens of millions of shares in the company, according to the draft document. The SEC is investigating whether any of the communications between Trump Media and Digital World before the deal was announced violated rules.
Patrick Orlando, CEO of Digital World, did not return requests for comment, as did representatives from Trump Media. The Truth Social network got off to a rocky start. Trump has only recently started posting messages regularly to his nearly 3 million followers. He had nearly 90 million Twitter followers before he was kicked out by the platform last year.
Elon Musk, the billionaire businessman who recently made a bid to buy Twitter, said he would let Trump return to the platform if the deal closed, but the Republican said he would remain on Truth Social. But a new licensing agreement Trump has signed with Trump Media opens the door for him to also post political messages on Twitter if the social network lifts its ban.
