Biotech ProKidney LP will merge with a blank-check firm backed by veteran dealmaker Chamath Palihapitiya to go public in a deal valuing the combined entity at $2.64 billion, the companies said on Tuesday.

The merger with Social Capital Suvretta Holdings Corp III will hand ProKidney up to $825 million in gross proceeds to advance the development of its treatment for chronic kidney diseases.

The proceeds include the $250 million the blank-check firm raised through an initial public offering (IPO) in July and a $575 million private investment in public equity, or PIPE.

Investors in the PIPE include Palihapitiya's Social Capital, Suvretta Capital's healthcare-focused fund Averill and ProKidney's existing shareholders.

ProKidney says its technology has the potential to treat chronic kidney diseases by using the patient's own cells to restore organ function.

Often hailed as a "SPAC King", Palihapitiya has sponsored some of the most high-profile blank-check deals including those for fintech SoFi Technologies Inc and home-selling platform Opendoor Technologies Inc.

He has said he remains bullish  on the long-term prospects of the sector despite a slowdown in blank-check merger activity in the latter half of 2021.

Blank-check firms, or special purpose acquisition companies (SPACs), are publicly-traded investment vehicles that merge with a private company to take it public, thereby allowing it to sidestep a traditional IPO.

The ProKidney deal is expected to close in the third quarter of this year, after which the combined company will be listed on the Nasdaq under the ticker symbol "PROK".

(Reporting by Niket Nishant and Sohini Podder in Bengaluru; Editing by Aditya Soni) ((;))