Former US 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 they commanded in a deal with a blank-cheque acquisition firm in October.
Two people familiar with the matter told Reuters that the 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-cheque firm Digital World Acquisition Corp is completed.
The deal valued Trump Media at $875m, including debt, and the company is now seeking to raise up to an additional $1bn at a valuation of close to $3bn, 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 Mr Trump and the Digital World dealmakers are seeking to capitalise on the market euphoria around their venture, which has so far been fuelled 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, the sources said.
Weighing on the deal's appeal is the reluctance of many investors to associate with Mr Trump after he was banned from top social media platforms for encouraging his supporters to participate in the January 6 attack on the US Capitol, which was based on unsubstantiated claims of widespread fraud in last year's presidential election.
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An explosion caused by a police munition is seen while supporters of former president Donald Trump gather in front of the US Capitol Building in Washington, US, January 6, 2021. Reuters -
A supporter of US President Donald J. Trump sits on the desk of US House Speaker Nancy Pelosi, after supporters of US President Donald J. Trump breached the US Capitol security in Washington. EPA -
Police detain a person as supporters of US President Donald Trump protest outside the US Capitol. AFP -
Protesters enter the US Capitol Building. AFP -
A protester holds a Trump flag inside the US Capitol Building near the Senate Chamber. AFP -
US Capitol police officers point their guns at a door that was vandalized in the House Chamber during a joint session of Congress. AFP -
Members of congress run for cover as protesters try to enter the House Chamber during a joint session of Congress. AFP -
Congress staffers barricade themselves after Trump supporters stormed inside the US Capitol. AFP -
Congress staffers barricade themselves after Trump supporters stormed inside the US Capitol. AFP -
Congress staffers hold up their hands while Capitol Police Swat teams check everyone in the room as they secure the floor of Trump supporters. AFP -
US Capitol Police stand detain protesters outside of the House Chamber during a joint session of Congress. AFP -
A supporter of US President Donald Trump sits at a desk after invading the Capitol Building. AFP -
A protester sits in the Senate Chamber. AFP -
Pro-Trump protesters tear down a barricade as they clash with Capitol police during a rally to contest the certification of the 2020 US presidential election results by the US Congress. Reuters -
Police hold back supporters of US President Donald Trump as they gather outside the US Capitol's Rotunda. AFP -
Supporters of US President Donald Trump enter the US Capitol's Rotunda. AFP -
A protester is seen hanging from the balcony in the Senate Chamber. AFP -
Riot police prepare to move demonstrators away from the US Capitol. AFP -
Trump supporters clash with police and security forces as they storm the US Capitol. AFP -
Trump supporters clash with police and security forces, as they storm the US Capitol. AFP -
A supporter of US President Donald Trump wears a gas mask as he protests after storming the US Capitol. AFP -
Pro-Trump supporters storm the US Capitol following a rally. AFP -
Supporters of US President Donald Trump protest inside the US Capitol. AFP -
US President Donald Trump is seen on TV from a video message released on Twitter addressing rioters at the US Capitol, in the Brady Briefing Room at the White House in Washington, DC. AFP -
Trump supporters clash with police and security forces as they storm the US Capitol in Washington, DC. AFP -
Supporters of US President Donald Trump protest in the US Capitol Rotunda. AFP -
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A wounded protester is carried on barricade as demonstrators breach the US Capital building grounds. Bloomberg -
US Vice President Mike Pence and House Speaker Nancy Pelosi preside over a joint session of Congress to certify the 2020 Electoral College results after supporters of President Donald Trump stormed the Capitol earlier in the day on Capitol Hill in Washington, DC. EPA -
Rep. Andy Kim, D-N.J., cleans up debris and personal belongings strewn across the floor of the Rotunda in the early morning hours of the morning, after protesters stormed the Capitol in Washington. AP
The deal also faces regulatory risk. Elizabeth Warren, a US senator, asked US Securities and Exchange Commission Chairman Gary Gensler last month to investigate the planned merger for potential breaches of securities laws around disclosure. The SEC has declined to comment on whether it plans any action.
Trump Media and Digital World have asked investors to finalise commitments to the Pipe by the middle of December, the sources said.
In a Pipe roadshow attended by one of the sources, investors were asked to commit between $10m and $20m. Neither Mr Trump nor Digital World executives made an appearance and the investor presentation was led by David Boral, president of EF Hutton, an investment bank that advised Digital World on the deal, the source said. A Trump Media representative was also in attendance, the source added.
Mr Trump has said he is launching his own social media app to stand up against the companies that have barred him from their platforms. He had 89 million followers on Twitter, 33 million on Facebook and 24.5 million on Instagram at the time he was blocked, a presentation on his company's website shows.
Since Mr Trump was voted out of office last year, he has repeatedly dropped hints that he might seek the presidency again in 2024.
