Is SPAC an alternative route for companies going public? Much like other things in the world of finance and business, the stock market continues to innovate itself. People interested in making their companies go public normally have to go through many hoops to achieve this feat. Thus, one way to overcome these hurdles is to use a SPAC or a special purpose acquisition company.
These shell companies’ primary objective is to acquire a private company as their target. Once the SPAC merger occurs, the company that the SPAC absorbed becomes public without going through the regular initial public offering (IPO) process. This cycle saves time and resources and provides the target company with funding, resources, and exposure. More and more people are embracing this strategy due to how fast the process of publicizing is in this setup.
With how fast SPACs are picking up steam, it makes sense to look into how the world looks at this practice. More countries are exploring this setup outside the United States, and the list of companies that went public through a SPAC is also growing. Although there is still a fair share of doubters that do not have confidence in SPACs, there is no doubt about their impact on the market.
Why is SPAC the Internet’s Next Big Thing?
The current trend of going through SPACs is reminiscent of the internet boom in the latter half of the 1990s. Companies now see benefits of SPAC over traditional IPO. Companies that have yet to accumulate profits are going public, even as their goals may be deemed unrealistic or too forward-thinking by experts. There is a lot of growing confidence in SPACs, with celebrities also engaging in these investments. Some of the influential figures invested in SPACs include Shaquille O’Neal, Ciara, and Serena Williams.
The SPAC IPOs in 2020 were huge for TMC and Financial services in terms of industry occupying 20% each of the total market share. The health care industry has 7% of the market share. Similarly, Industrial and energy companies hold 3% each of the global market share. Here’s the graph for SPAC IPOs by Industry in 2020.
Considering the growing presence of SPACs on the internet, more people will follow suit and engage with SPACs for their company to go public. But as online forums and social media platforms talk about the “SPAC boom,” industry analysts still believe that this trend will backfire. In the first half of 2021 alone, almost $45 billion has been raised over 140 deals. The suits at Wall Street are pretty skeptical over the feasibility of investing in a strategy that relies on trial and error.
Still, there are a lot of reasons why people continue to go after SPACs. For instance, the usual IPO process is geared towards people with abundant resources and capital. There are individuals who want to take their chances at a growing startup or company might not be privileged enough to be in a roadshow; a SPAC has equal investment opportunities for everyone.
Furthermore, the IPO process is tedious. It gets to a point where technology companies with the incentive to go public are actively looking for alternatives to an IPO. Naturally, one of these methods is the use of a SPAC. What turns some people off of the idea is the very nature of these shell companies. When someone invests in a SPAC, they essentially place their resources and trust in an “empty” business. Usually priced at $10 per share, SPACs only begin to look for a target when the initial setup is finished. They have two years to fulfill the need for a mark, or else all funds must revert to their investors.
Perhaps it is this unorthodox and controversial manner of going public that makes SPACs a popular internet topic. Another reason is that SPACs provide companies the resources to create advanced forecasts and projections. These practices are not usually advised in IPOs because of the risk of accruing liabilities.
SPACs are also faster than traditional IPO. There is also less of a need to consult multiple parties such as bankers and legal counsel. For those who want to make their companies public, a SPAC is more cost efficient and suited to the urgency.
Global Companies Adopting SPAC (USA, Canada, India, and More)
Around the world, SPACs are experiencing a rise in popularity. While they are not a new concept to the stock market, the past few years have been instrumental in cementing their presence. The United States alone has hundreds of SPACs currently looking for target companies, with some already in various stages of securing a deal. American companies that helped usher in the SPAC boom include Virgin Galactic and Nikola, both from the electric vehicle industry.
Another reputable American SPAC is Pershing Square Tontine Holdings Ltd., a company that has reached over $5 billion for its market cap. Most of the SPACs in the USA belong to the tech and finance industries. Metromile is another company that went public recently after being acquired by INSU Acquisition Corp II, a SPAC with funds going over $160 million.
Various countries adopted SPAC in Q1 of 2021. United States still remains the number one with the highest number of IPOs listed with over 55%, followed by Cayman Islands with 37% of total IPOs. Here’s the graph for SPAC IPOs listed by countries in 2021.
In Canada, the SPAC market is geared towards the mining and cannabis industries. While a surprising trend to people who ignore market trends, these fields have enjoyed consistent growth in SPACs because of how quick the process was for them. In the past few years, however, SPACs in the cannabis field have slowed down due to maturation.
This setback may be due to a shift in the IPO policies in Canada, making them a more natural choice for companies in the region. Still, SPACs are a force to deal with. Subversive Real Estate Acquisition Corp. is a Canadian SPAC that acquired InterCure Ltd., a cannabis company based in Israel. In addition, NextPoint Acquisition Corp has funds amounting to almost $270 million and is targeting a finance company.
Overseas, Indian SPACs are also taking off. The country’s most famous sustainable energy business reached headlines when it allowed itself to be acquired by RMG Acquisition Corporation II, a SPAC that has its base of operations in the United States. Grofers, an online grocery provider, is also a hot topic in New York-based circles.
Europe is no stranger to the SPAC boom as well. In Germany, Rocket Internet has expressed its intentions to use a SPAC hailing from New York to become a notable player in the field. The United Kingdom has less movement on the SPAC front, but several companies have stepped up to cement themselves as notable players. For instance, J2 Acquisition is well-known among investor circles as it raised more than $1.25 billion. This is the most considerable amount of money accrued by a London-based shell company in a decade.
SPAC Companies List
Because of the fanfare surrounding SPACs, those who want to try out their luck and invest in these shell companies may want to see a list of all the possible options. The Securities and Exchange Commission has publicly available information about this, but those new to the world of investing may want something more convenient. Luckily, SPACrun, a web-based service, has all the information one is looking for in a SPAC companies list.
Beyond providing a simple list, SPACrun also has a comprehensive chart detailing market trends, growth movements, and other relevant information.
SPAC Database and Stock List
A SPAC Database and a SPAC Stock List are two tools that any enthusiast could use to place investments in companies. Not only will they serve as a guide for someone looking to put their money on a SPAC, but they also help save time and resources. They will also allow someone to make faster moves on the market, as going through the SEC database one by one can be time-consuming.
Because it is up to date on the latest news and headlines regarding SPACs, SPACrun is a reliable database and stock list. It displays information in a comprehensive and clean chart and provides users with the ability to follow specific SPACs. In addition, SPACrun is a platform that will enable you to receive instant alerts via SMS or email when the stock of a particular company signs a definitive agreement or is involved in a merger or acquisition. This saves you time from having to monitor your SPAC lists on a daily basis.
SPAC IPOs in 2021
In 2021, SPACs seem to be getting some attention away from the traditional IPO process. While the sociopolitical situation has given rise to unconventional and previously unexpected movements in the market, IPOs remain the tried and tested method for some companies. However, SPACs present an alternative that will continue to persist throughout 2021. In the first few months, SPACs received over $90 billion.
The United States remains the most lucrative space for SPACs in 2021, continuing the trend of rising funds. While the current figure has already exceeded the entirety of 2020 (over $80 billion), the previous year was instrumental in cementing SPACs as a trend; it was a far cry from the measly $13 billion raised in 2019.
Technology and finance companies continue to raise interest within SPACs in 2021, and there are talks of more big names using this route as the year unfolds.
Whether or not one decides to place their bets on a SPAC, it carved its place as an alternative to the usual IPO process. There are still qualms about its place in the investment world, but SPACs provide people with the chance to use their resources for shares. This alternative is a welcome one for people who did not have the machinery to take part in roadshows. Like all things involving money, any interested party must know all their options and avoid making hasty choices. In the end, the choice to invest in a SPAC is in the hands of the individual.
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