The move gives Clover, the San Francisco Medicare-supplement provider, an enterprise value of $3.7 billion.
The deal would generate $1.2 billion in gross proceeds, including a PIPE -- private investment in public equity -- of $400 million from a number of investors and as much as $828 million of cash held in the Social Capital trust account.
The venture capitalist Chamath Palihapitiya, founder and chief executive of Social Capital, will invest $100 million of the PIPE and will be a senior adviser to the new company’s management.
Clover will receive as much as $728 million of transaction proceeds. As much as $500 million of cash proceeds will be allocated to current Clover shareholders. Clover's senior officers will roll all their equity into the new company.
"We have made it our business to make healthcare affordable. Our technology helps doctors, leading to better outcomes and lower out-of-pocket expenses for members," said Andrew Toy, president and co-founder of Clover.
Clover's software platform delivers data and personalized insights to primary-care doctors at the point of care.
The platform aggregates millions of health-data points -- including claims, medical charts and diagnostics -- and uses machine learning to synthesize the data with "member-specific information," the company said.
Clover serves more than 57,000 members across Arizona, Georgia, Mississippi, New Jersey, Pennsylvania, South Carolina, Tennessee and Texas. The company says it is the fastest growing Medicare Advantage insurer in the country among insurers with more than 50,000 members.
In turn Medicare Advantage is one of the fastest growing markets in the U.S. healthcare system with a value of $270 billion today and an estimated value of $590 billion by 2025, the company said.
The boards of Social Capital, Palo Alto, Calif., and Clover have approved the deal. Subject to conditions including regulatory clearances and a vote of Social Capital holders, the companies hope to close the deal in the first quarter.
Shares of Social Capital were at last check trading off 12% at $11.21.