SPACs - Eternal innovation in the financial markets
SPACs are probably hovering in third place behind cryptocurrencies and the blockchain as the biggest talking points in the investment markets over the last 18 months. The main reason why people aren’t talking about them more is that crypto in its various forms has dominated so much of the economic conversation.
Despite the lack of mainstream attention, according to a recent article by Forbes [LINK: https://www.forbes.com/sites/hanktucker/2021/04/06/chamath-palihapitiya-and-nine-other-new-billionaires-minted-by-spac-frenzy/?sh=4a332d86ed19] SPACs have raised US$180 billion since the beginning of 2020. The data suggests that the use of the vehicles is accelerating, with the US$87bn raised by 248 SPAC deals in 2020 already surpassed by the US$93bn raised by 300 deals so far in 2021.
What is a SPAC?
But what are they? To keep it simple, SPACs are a way of taking private companies public by raising money on an exchange through a shell company and then using the money to acquire a target company. The approach means that the target company can be floated without having to jump through the hoops associated with a traditional initial public offering (IPO).
What this means in practice is that while a traditional IPO can take around a year to get to market, a SPAC can get a company listed on an exchange in a matter of weeks. Given the challenges that the last eighteen months have presented, a rapid route to market and funding can be an attractive proposition.
Critics might raise an eyebrow at using a vehicle to bypass the traditional checks that are necessary to list a company, but one of the benefits of a SPAC is that their fund-raising actovotoes tend to be focused on professional rather than retail investors. Retail investors might miss out on the opportunity, but they also miss out on the risk.
That said, some regulators are looking meaningfully at SPACs. The UK’s Financial Conduct Authority (FCA) announced at the end of March that it wanted to that SPACs operate within a “framework of high regulatory standards and oversight” and is expecting to have such a framework in place by early summer. Once one regulator starts making that kind of pronouncement, there is a decent chance that others will follow. Indeed, both Hong Kong and the Singapore Exchange are said to be in the process of developing a structured framework to allow SPAC listings.
But of course, other global financial centres could decide not to follow the FCA’s lead and allow SPACs to continue to raise money as they do today. If they decide to do that and the FCA, Hong Kong and the Singapore Exchange continue down the road of regulation, there is a chance that several promising companies in the UK and Asia could decide to take future listings away from their native markets and make the most of the freedoms offered elsewhere.
This risk was highlighted when UK-based Cazoo, an online platform for used car sales that has enjoyed strong performance during the lockdowns of 2020 and 2021, announced that it would merge with Ajax I, a New York-listed SPAC. The deal sees Cazoo valued at around US$7bn, more than double the US$2.6bn valuation it received in a private funding round six months earlier.
…is an opportunity and a risk
The challenge with the more laissez faire regulatory approach from this perspective is that there is a risk of someone finding a way to take undue advantage of the vehicle, circumvent the regulatory framework, suffer a collapse and damage both confidence and financial returns. There is also the widely discussed risk that the SPAC boom is a bubble waiting to burst. As it turns out, the balance of risk against opportunity works for regulators as well as investors.
It is this competitive pressure, even among regulators, that keeps the financial markets changing and moving forward. As complicated as it is, it is the reason why the financial markets are eternally evolving, and why regulators need to manage their risk appetites as much as investors.
QATO CONSULTING LIMITED
Collingham House 6-12 Gladstone Road
SW19 1QT London
About Marco Quacken
Marco has a passion for business development that helps projects succeed and businesses flourish. With a global network of contacts, he brings teams together, matching expertise to requirements and implementing strategies that help good ideas grow into sustainable businesses. He has experience across a range of sectors including finance, real estate, technology, advertisement, automotive, consumer goods, energy, retail, sports and telecommunications.
This release was published on openPR.
Permanent link to this press release:
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.
You can edit or delete your press release SPACs - Eternal innovation in the financial markets here
News-ID: 2275991 • Views: 500
More Releases from Qato Consulting Limited - Marco Quacken
NFTs: But is it art?
One of the topics that has kept popping up throughout the last year has been non-fungible tokens (NFTs), these funny little bits of cryptology that, in the eyes of the evangelical, have the potential to replace money, change the nature of commerce, and revolutionise the very functioning of the financial markets. Many other people are scratching their heads wondering if they really as good as all that and even if
Is this the dawning of the age of the metaverse?
Most of the time, people not involved with a specific sector can ignore the buzz words that seem to inevitably spring up around an interesting idea. The trick is to wait for them to reach the point where it looks like they might get to a critical mass and become important to a wider audience. The metaverse is one such word, something that’s just starting to become visible in the
Will CBDCs bring balance to crypto?
Crypto’s independence is the answer to several of humanity’s challenges, but its freedom also attracts scams that earning criminals billions each year. Is there a way for society to enjoy the benefits the emerging digital currencies while reducing the risk of fraudulent behaviour? Some say that central bank digital currencies hold the answer, but there is a risk that they don’t solve the issues, simply change the nature of the
Will you accept crypto becomes when will you accept crypto?
Crypto has achieved many things in its short life. It has been lauded as the next big thing while simultaneously being pilloried as an accident waiting to happen (or being an accident in the middle of happening). Regulators have spoken out against it at the same time as small investors have flocked to it. Pages and pages of content have been written explaining why this time, crypto is going to
More Releases for SPAC
Investigation announced for Investors in Abri SPAC I, Inc. (NASDAQ: ASPA) over p …
An investigation was announced for long-term investors in shares of Abri SPAC I, Inc. (NASDAQ: ASPA) over potential breaches of fiduciary duties by certain officers and directors at Abri SPAC I, Inc. Investors who purchased shares of Abri SPAC I, Inc. (NASDAQ: ASPA) have certain options and should contact the Shareholders Foundation at firstname.lastname@example.org or call +1(858) 779 - 1554. The investigation by a law firm concerns whether certain Abri SPAC I,
Investigation announced for Investors in Abri SPAC I, Inc. (NASDAQ: ASPA) shares
An investigation was announced for investors of Abri SPAC I, Inc. (NASDAQ: ASPA) shares over potential securities laws violations in connection with certain statements. Investors who purchased shares of Abri SPAC I, Inc. (NASDAQ: ASPA), have certain options and should contact the Shareholders Foundation at email@example.com or call +1(858) 779 - 1554. The investigation by a law firm focuses on possible claims on behalf of purchasers of the securities of Abri SPAC
EC Assets to list $250 million Tech SPAC in New York
The Luxembourg-based team at EC Assets, led by Ludwig Klatzka, is currently preparing to list a SPAC in New York. The prospectus and the listing application for this are to be filed with the SEC in New York before the end of March. EC Assets intends to issue a total of 25 million units exclusively to institutional investors at a price of $10.00 per unit, representing a placement volume of $250 million.
SPAC, the inference from American Technology
April, 14 2019 – Milan, Italy | Milano Finanza Today Milano Finanza, one of the major Italian newspaper for Finance, uses Kaleyra as a success story to deepen the topic related to SPAC. To learn more about SPAC, read the article below: “Kaleyra, an Italian group leader in the mobile messaging services for banks, SMEs and enterprises, announced at the end of February that it will be listed on NYSE. Thanks to
Dextrin Powder Market Size, Share, Development by 2024– Top Key players like S …
Market Research Report Store offers a latest published report on Dextrin Powder Market Analysis and Forecast 2019-2025 delivering key insights and providing a competitive advantage to clients through a detailed report. The report contains 91 pages which highly exhibit on current market analysis scenario, upcoming as well as future opportunities, revenue growth, pricing and profitability. Click to view the full report TOC, figure and tables: https://www.marketresearchreportstore.com/reports/359059/global-dextrin-powder-market According to this study, over the next
New Study On Carboxy Methyl Starch (CMS) Market 2018-2025| Patel Industries, Ada …
UpMarketResearch offers a latest published report on “Global Carboxy Methyl Starch (CMS) Market Industry Analysis and Forecast 2018-2023” delivering key insights and providing a competitive advantage to clients through a detailed report. The report contains 114 pages which highly exhibits on current market analysis scenario, upcoming as well as future opportunities, revenue growth, pricing and profitability. The report contains basic, secondary and advanced information pertaining to the Carboxy Methyl Starch