Special interview
Written by: Xu Shihao
2021-02-23 09:48
The last update date: 2021-02-23 09:48
The popularity of SPACs in the United States last year has been extended to this year. Since the beginning of the year, about 160 SPACs have been listed. More and more well-known investment banks and "Da Masha" have joined the market. Among them, PCCW (0008) Chairman Li Zekai is considering listing in the United States. Set up a third SPAC, and Japan's SoftBank (SoftBank) has also applied for the company's first SPAC IPO and plans to raise US$500 million to US$600 million.
SPAC has appeared as early as the 2000s and is nothing new. Why did it start to become the new darling of Wall Street last year?
Compared with traditional IPO, SPAC financing mechanism is very different.
More importantly, the stock prices of many SPACs before and after mergers and acquisitions rose sharply last year. With satisfactory investment returns, the number of SPAC listings continued to hit new highs.
SPAC (Special Purpose Acquisition Company), Chinese often translated into "special purpose acquisition company" or "blank check company", is a unique form of listed company in the US capital market.
SPAC is usually listed by raising funds from mutual funds, hedge funds, etc. In the early stage, it can be said that there is no actual business, but a cash-holding "shell" waiting to be acquired.
Different from "backdoor listing", SPAC's "sponsors" (Founder, Sponsor) will provide about 10% of the start-up capital to cover the costs of the IPO, and achieve the purpose of "building a shell before seeking mergers and acquisitions". Eventually, the target of the merger becomes a listed company.
Simply put, SPAC has the following three characteristics.
As of last Friday, the United States has temporarily recorded about 160 SPAC listings, raising 47.58 billion yuan, accounting for more than half of last year.
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Feature 1. The price is uniform at US$10 per share with warrants
The "units" purchased by institutional investors at the IPO stage consist of "common stocks" and "warrants" (warrants), usually one common stock with 1/2 or 1/3 warrants, according to custom The price per "unit" is usually $10, which is easy to calculate.
But there are exceptions to everything.
The more famous the sponsor, the finer the proportion of warrants provided, and they will not even provide them. For example, the SPAC company "Bridgetown Holdings" established by PCCW Chairman Li Zekai and PayPal co-founder Peter Thiel did not provide warrants. .
Feature 2: Quick listing and completion of acquisitions, no lock-up period
In traditional IPOs, companies need to find sponsors, investment banks for valuation, and contact basic investors and other cumbersome procedures, which take a relatively long time and effort.
Since SPAC itself has no actual business, its own listing process is relatively fast; after listing, the management team focuses on negotiating with the target company. Generally, the acquisition can be announced within three to four months; there is no lock-up period, and investors will immediately Share trading is possible.
Feature 3: Betting that the investment team is dissatisfied can get back the principal and leave the market
At the time of listing, the investment team will only disclose the industries it intends to acquire, so investors do not know what companies they will invest in.
It was not until the final announcement of the merger stage vote that the company was actually invested, so to a certain extent it was betting on the investment team, and its track record was very important.
The funds used for mergers and acquisitions will be held in trust before the successful acquisition, and shareholders can decide whether to agree to the target company's merger plan at the shareholders' meeting.
If the merger is not completed within the two-year period, the investor can get back the funds and interest and lose the "time cost" and leave the market.
The number of listings continues to hit a new high
According to data from the research company SPAC Research, there are 445 U.S. stock IPOs in 2020, of which 248 are SPACs, accounting for 56%. Last year, SPACs alone raised US$82 billion (HK$639.6 billion), which was a record set in 2019 6 times higher.
In fact, as of last Friday, 160 SPAC listings have been temporarily recorded, raising US$47.58 billion (approximately HK$371.1 billion), accounting for more than half of last year. According to Goldman Sachs, the global SPAC listing and M&A scale will reach US$300 billion in the next two years. , The scale should not be underestimated.
It is reported that Playboy, the publisher of adult magazines, is relisting in the form of SPAC.
"Playboy" and SoFi are both listed as SPAC
It is worth noting that SPAC is a non-Wall Street new product that has existed as early as the 2000s. However, in recent years, "sponsors" have concentrated on technology, new energy and other start-ups and merged them with SPAC.
Most of the related companies are not profitable, but have certain market potential.
Based on market news, shared office company WeWork, adult magazine publisher "Playboy", hydrogen fuel cell heavy-duty vehicle company Hyzon Motors, and online securities firm SoFi are all interested or are applying for listing through SPAC.
More importantly, many SPACs merged with the target company, especially after the merger with new economy-related companies, the stock price rose sharply. Taking the space tourism company Virgin Galactic (SPCE) as an example, the stock price rose more than 4 times after the merger. Li Zekai and PayPal co-founder Peter Thiel co-founded the two SPAC companies "Bridgetown Holdings" (see picture). The stock price has also increased by nearly 40% to 70%. It has been sought after by many retail investors, and it has also attracted funds to accelerate the "shell".
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