United States securities and exchange commission logo
August 18, 2021
Ali Parsadoust, Ph.D.
Chief Executive Officer
Babylon Holdings Ltd
1 Knightsbridge Green
London, SW1X 7NW
United Kingdom
Re: Babylon Holdings
Ltd
Amendment No. 1 to
Registration Statement on Form F-4
Filed August 9,
2021
File No. 333-257694
Dear Dr. Parsadoust:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Amendment No. 1 to Registration Statement on Form F-1 filed August 9,
2021
Cover Page
1. We note your revisions
in response to prior comment 1. Please also disclose the Sponsor
and its affiliates
total potential ownership interest in the combined company assuming
exercise and conversion
of all securities.
Questions and Answers about the Business Combination and the Special
Meeting
Q: What interests do the Sponsor and the current officers and directors
of Alkuri have in the
Business Combination?, page xii
2. We note your disclosure
in response to prior comment 5 that the initial stockholders and
holders of private
placement warrants will be able to recognize a greater return on their
Ali Parsadoust, Ph.D.
FirstName LastNameAli
Babylon Holdings Ltd Parsadoust, Ph.D.
Comapany
August 18, NameBabylon
2021 Holdings Ltd
August
Page 2 18, 2021 Page 2
FirstName LastName
investment than Alkuri's public stockholders. Please clarify that the
Sponsor and its
affiliates can earn a positive rate of return on their investment,
even if Alkuri's public
stockholders experience a negative rate of return in the post-business
combination
company, and how this leads to a misalignment of interests. Please
also quantify the
misalignment of interests by disclosing the Sponsor's investment per
share compared to
Alkuri's public stockholders' investment per share and the possible
returns on these
investments.
3. We note your revisions in response to prior comment 6 and reissue in
part. Please quantify
the aggregate dollar amount of what the Sponsor and its affiliates
have at risk that depends
on completion of a business combination. In addition, please provide
similar disclosure
for Alkuri s officers and directors, if material, or otherwise
advise.
Risk Factors
Alkuri's stockholders will experience dilution as a consequence of the Business
Combination.,
page 40
4. We note your response to prior comment 14 and revised disclosure on
page 40. Please
disclose the potential impact of redemptions on the per share value of
the shares owned by
non-redeeming shareholders by showing a range of redemption scenarios,
including
minimum, maximum and interim redemption levels. It appears that
underwriting fees
remain constant and are not adjusted based on redemptions. Revise your
disclosure to
disclose the effective underwriting fee on a percentage basis for
shares at each redemption
level presented in your sensitivity analysis related to dilution. In
addition, we note your
disclosure on page 19 that you expect to issue 7,030,000 shares of
Babylon Holdings as
consideration in the Higi transaction. Please also update your
disclosure to quantify the
potential dilution relating to the potential Higi transaction.
Because Babylon will become a public reporting company by means other than a
traditional...,
page 94
5. We note your disclosure in response to prior comment 13. Please expand
your disclosure
to specify that investors will not benefit from potential underwriter
liability for material
misstatements or omissions in the registration statement and
additional roles of the
underwriter in a traditional underwritten initial public offering,
such as the book-building
process that helps inform efficient price discovery and underwriter
support to help
stabilize the public price of the new issue immediately after listing.
Background of the Business Combination, page 115
6. We note your response to prior comment 21 and reissue in part. Please
clarify the
meaning of your statement regarding what the Sponsor "would otherwise
receive as
consideration for the Business Combination."
7. We note your response to prior comment 20. Please revise your
disclosure to identify who
proposed the initial super-voting structure and how this transaction
term evolved
Ali Parsadoust, Ph.D.
FirstName LastNameAli
Babylon Holdings Ltd Parsadoust, Ph.D.
Comapany
August 18, NameBabylon
2021 Holdings Ltd
August
Page 3 18, 2021 Page 3
FirstName LastName
throughout your negotiations.
Unaudited Projected Financial Information, page 127
8. Please revise to address the following regarding your responses to
prior comments 22, 36,
38, and 39:
You disclose here that your definition of gross profit as
presented in your table on
page 128 is revenue less cost of care delivery. To the extent
your gross profit
measure here does not reflect all direct costs of revenues, tell
us why you believe that
definition is useful or appropriate given your responses to
comments 36 and 39
explain that cost of care delivery does not include all direct
costs of your revenues.
Revise to delete your gross profit projection line here or revise
it to reflect all direct
costs of the revenues presented.
To the extent your gross profit measure here does reflect all
costs of revenues, tell us
why you believe the measure is useful here for evaluating
projections but not for
evaluating your historical operating results.
Tell us how you determined that research and development
activities are
appropriately similar in nature to report on the same line item
as your the direct
technology expenses related to service revenue. Explain how you
considered that
blending these types of expenses makes it difficult for readers
to evaluate both your
current results of operations as well as the amounts invested for
future benefit.
Clearly explain how you determined that your presentation is
appropriate or revise
accordingly to separately quantify these amounts in separate line
items.
To the extent you are able to support your current line item
presentation, revise the
footnotes to the financial statements of Babylon Holdings Limited
to quantify the
research and development components of your R&D and Technology
expenses line
item separately from your direct cost of revenues in that line
item. Revise the results
of operations section of your MD&A to separately quantify those
amounts and
discuss any significant trends within those line items.
For purposes of your response to prior comment 38, tell us how you
determine whether any of your capitation arrangements are loss
contracts if you do
not capture and monitor all direct costs of your revenues. Revise
to describe the
extent to which you evaluate all direct costs of the capitation
contracts for this
purpose. Specifically explain the extent to which any of the
direct cost related to
your capitation contracts are included outside of the cost of
care delivery line item.
We note your Key Business and Financial Metrics section on page
219 presents your
various revenue streams but the only expense line item presented
is cost of care
delivery. Tell us how you determined this presentation is
balanced and does not
imply that your cost of care delivery represents your entire
amount of direct costs.
Revise your presentation accordingly.
Material U.S. Federal Income Tax Considerations, page 158
9. We note your response to prior comment 26 that you do not plan on
filing
Ali Parsadoust, Ph.D.
FirstName LastNameAli
Babylon Holdings Ltd Parsadoust, Ph.D.
Comapany
August 18, NameBabylon
2021 Holdings Ltd
August
Page 4 18, 2021 Page 4
FirstName LastName
a tax opinion supporting a conclusion that the Business Combination
should be tax-free to
U.S. holders; however, you still represent that the Company "intends"
for the Business
Combination to be considered a tax-free "reorganization" under the
provisions of Section
368(a) of the Code. Whenever there is significant doubt about the tax
consequences of the
transaction, it is permissible for the tax opinion to use should
rather than will, but
counsel providing the opinion must explain why it cannot give a
will opinion and
describe the degree of uncertainty in the opinion. Please refer to
Section III.C.4 of Staff
Legal Bulletin 19. In addition, please also provide additional
disclosure in the "Questions
and Answers About the Business Combination and the Special Meeting"
section to clarify
the risk of uncertain tax treatment to investors.
Babylon's Business
Proven & Highly-Scalable Care Delivery Model, page 192
10. We note your revised disclosure in response to prior comment 30.
Please also revise
footnote (1) to clarify how "Revenues per Lives Covered" is
calculated, including what
period of time this figure is based on for each company shown in the
graphic. In addition,
please balance your disclosure regarding scalability by referencing
factors that would
inhibit scalability, such as the considerations that appear in the
risk factors throughout
your disclosure on pages 48-54, including Babylon Holdings' history of
net losses.
United Kingdom, page 197
11. We note your revisions in response to prior comment 28. Please further
expand your
disclosure to describe the CQC's ratings system so that investors can
put the "good"
overall rating and "outstanding" leadership rating in context.
Medical Device Regulation, page 208
12. We note your expanded disclosure on pages 190 and 208 in response to
prior comment
34. Please further expand your disclosure to clarify, if true, that
your technology was not
independently tested nor approved by a notified body. We also note
your risk disclosure
on page 78 that it would be costly to you if there are changes to the
laws and regulatory
requirements governing artificial intelligence and software as a
medical device. Please
expand your disclosure to specify how the laws and regulatory
requirements may change
and how they may impact your business operations.
General
13. Your use of footnotes on pages 190 and 191 is not appropriate. Please
revise your
narrative disclosure to include the relevant disclosure contained in
the footnotes in the
specific paragraphs to which the the footnotes relate.
You may contact Ibolya Ignat at 202-551-3636 or Kevin Vaughn at
202-551-3494 if
you have questions regarding comments on the financial statements and related
matters.
Please contact Jason Drory at 202-551-8342 or Irene Paik at 202-551-6553 with
any other
Ali Parsadoust, Ph.D.
Babylon Holdings Ltd
August 18, 2021
Page 5
questions.
Sincerely,
FirstName LastNameAli Parsadoust, Ph.D.
Division of Corporation Finance
Comapany NameBabylon Holdings Ltd
Office of Life Sciences
August 18, 2021 Page 5
cc: Michael Labriola, Esq.
FirstName LastName