They're very fashionable on Wall Street: IPOs of companies without a business model.
Your only goal is to swallow "real" companies.
They enable the takeover candidates to go to the floor through the back door.
These “Spacs” are high-risk for small investors.
The flying taxi builder Lilium from Weßling in the Starnberg district wants to start series production of its whiz kid soon.
This has been known since spring.
Six years after the company was founded, that sounds like the next logical step.
Only: Such a large investment devours enormous sums of money.
One way to raise capital: Lilium issues shares and collects the money for investments on the stock exchange.
Investors would become co-owners and Lilium would have enough cash to make large investments.
What sounds simple is anything but easy in practice: the IPO itself is time-consuming and expensive.
The company needs an investment bank, which organizes an expensive road show to advertise the new shares to investors.
Complex stock exchange regulations have to be met, only then does it go on the floor.
The Weßling-based aviation company Lilium has decided on an abbreviation: At the end of March, the management around Lilium founder Daniel Wiegand announced that the Qell Acquisition Corp.
wanting to merge.
Up to this point in time no one in Germany has ever heard of this company, apart from a few financial experts.
The fact that the Quell company is largely unknown is not surprising: unlike Lilium, Qell has nothing to do with mechanical engineering, Qell is nothing more than an empty corporate shell. The only charm for Lilium is that Qell is already listed on the US stock exchange. Through a merger, the aviation company is creating access to the New York technology exchange Nasdaq through the back door. To avoid misunderstandings, Lililum also announced: After the merger, the new company will continue to be called Lilium.
With his project, Lilium is benefiting from a new fashion on the international capital markets: Financial experts call such empty corporate hulls “Spacs”, the abbreviation stands for “Special Purpose Acquisition Company”, ie a purely purpose-built company for takeovers or mergers.
An evaluation by the Frankfurt consulting firm Kloepfel Corporate Finance shows: of a total of 480 IPOs in New York in 2020, more than half were Spacs.
248 empty company cases went on the floor there last year, they collected 83 billion dollars - 57 percent of all proceeds from IPOs this year.
This year it can be observed that the trend continues to accelerate.
"The high number of new Spacs is an indication that there is a high willingness to take risks and a lot of liquidity in the market," explains Joachim Schallmayer, Head of Capital Markets at DekaBank, the phenomenon.
And in Europe?
According to the evaluation, only three Spacs went public in 2020, in Germany there was no Spac IPO at all.
"In the USA there is simply more venture capital than in Europe, especially since in the USA, unlike in Europe, many smaller companies also dare to go public."
The hype about the Spacs is only slowly arriving in the financial center of Frankfurt: With Lakestar, the first German Spac was back in February after a long break.
Start-up investor Klaus Hommels brought the financial vehicle onto the floor.
In the meantime it is also clear which company Lakestar will partner with: With the German Airbnb competitor HomeToGo, with a valuation of 1.2 billion euros, the holiday home marketplace will soon be listed on the stock exchange.
"Spacs offer high chances of price growth, but they are definitely high-risk," says Deka expert Schallmayer.
When Lakestar went public, it was ultimately unclear whether Spac would even find a partner with a profitable business model.
It looks like that now, but even now it is uncertain how HomeToGo will one day establish itself in the market.
“For small investors, buying individual shares is an increased risk if the diversification is not right,” warns Schallmayer.
Investments in start-ups are even more risky and only recommendable to small shareholders with an extremely wide diversification.
For the financial market vehicles themselves, which are primarily looking for such start-ups or lesser-known smaller companies, double caution applies, because investors here are literally buying the pig in a poke.
It is not for nothing that the Spacs are also called “blank check companies”: “Spacs shares are therefore only for professionals - small investors should keep their hands off them,” warns Schallmayer.
“Investors buy in the expertise of Spac management and trust these people that they will one day find a solid company with profitable business.” Even professional investors are therefore on their toes: “With some Spacs, the managers receive a high bonus, provided it does they manage to acquire within two years. ”Schallmayer sees a false incentive in this, if such a construction is available.
Because in the worst case, this can mean that a merger with a less profitable company comes about - the main thing is that the two-year period is adhered to and the payment to the Spac initiators is secured.
+
lewandowski.jpg
© Sven Hoppe
The hype about the Spacs is fueled by professional athletes like FC Bayern star Robert Lewandowski.
Together with other professional athletes, he is an official member of an advisory board of the US-listed corporate shell Disruptive Acquisition Corp.
I. According to its own statements, the special purpose vehicle registered in the Cayman Islands raised $ 250 million from investors when it went public on the Nasdaq in March.
The former Siemens boss Klaus Kleinfeld is also involved: He runs the business of Constellation Acquisition Corp.
I. The initial public offering in the USA brought in $ 300 million.
Prominent names designed to instill trust. “To stand up for an investment as a public figure should always be carefully considered,” says Schallmayer. This is shown by a Spac experiment in Germany a good ten years ago: At that time, Germany1 went public. Co-founders of the Spac were among others the consultant Roland Berger, ex-Arcandor boss Thomas Middlehoff and financial entrepreneur Carsten Maschmeyer. With their notoriety, they beat the drum for the publicly traded company without any operational business. Germany1 succeeded in merging with the solar supplier AEG Power Solutions in 2009, but in 2017 the newcomer slid into insolvency after weak financial years, and in 2018 the company disappeared from the stock exchange.
Overall, Deka expert Schallmayer rates the development in the USA positively: “Spacs are neither good nor bad per se, after all they make the capital market more efficient by giving both start-ups and established companies that have not previously been listed on the stock exchange quick access to capital enable, ”he says. "Only for small investors are there definitely less risky ways to invest their money in the stock market."
