Connect with us

SPACS

3 Questions Looming For The 2021 IPO Market

Avatar

Published

on

Law360 (January 3, 2021, 12:02 PM EST) — Following an explosive finish for the initial public offerings market in 2020, capital markets lawyers are expecting that momentum to carry into the new year independent of the pandemic and changes in the presidential administration.

Regardless, 2020 will be a tough act to follow. Through mid-December, 427 operating and blank-check companies went public, raising $160.1 billion, Dealogic reports. That’s more that double the prior year’s proceeds of $62.5 billion, generated by 211 IPOs in all of 2019.

The year also ended with a bang. Home-rental giant Airbnb and food delivery app DoorDash went public at eye-popping valuations in December, raising more than $3 billion each.

Plus, rumors are circulating that there will be more big IPOs in 2021 from tech startups such as trading app Robinhood, grocery delivery firm Instacart, online job marketplace ZipRecruiter, online education company Coursera and website publisher Squarespace. Cryptocurrency exchange Coinbase has also filed confidential plans to go public.

These companies belong to an elite category of startups called “unicorns” — private startups valued at $1 billion or more — which found receptive public markets in 2020.

To what extent the momentum is sustainable can be hard to forecast. Rallies in the IPO market are often fragile, as unforeseen macroeconomic events can rattle investor confidence. But assuming no disturbances, IPO lawyers say they are witnessing a steady pace of new filings across industries that — at least in the near term — bode well for new issuances.

“The pipeline is full of companies in confidential submissions and otherwise,” said Ropes & Gray LLP partner Craig Marcus, referring to the initial phase of an IPO filing, which is submitted confidentially to regulators. “There are a ton of deals looking to get out as we turn the page into 2021.”

Here are three questions to consider as the year unfolds.

Which Companies Will Thrive Post-Pandemic?

Coronavirus vaccines are expected to be distributed in 2021, potentially bringing economic relief as the public health crisis eases. Yet the IPO pipeline has still favored issuers that fared well in the pandemic, such as remote software and e-commerce companies that function with less in-person contact. The arrival of effective vaccines may not reverse that dynamic.

The December 2020 IPO roster featured companies that did well amid social distance, including DoorDash and e-commerce platform Wish. Other such companies could go to market in January, including online gaming platform Roblox and fintech startup Affirm, which partners with home-exercise company Peloton.

More broadly, recent IPO activity is occurring against an economic backdrop where business travel remains down while videoconferencing and telecommuting appear set to endure. Deal makers expect that technology companies suited for that shift will lead the pack in 2021.

“The impact of the pandemic is going to continue to ripple through next year,” Paul Hastings LLP partner Chris Austin said.

The health care industry is also closely intertwined with technology, and consumers are becoming more comfortable with telehealth visits and shopping for prescriptions online. Digital health company Amwell went public in September, following the path of competitor Livongo, which went public in 2019 and has since been acquired by Teladoc for $18.5 billion.

Prescription drug comparison platform GoodRx Holdings Incraised more than $1.1 billion in its September IPO, cashing in on the drive for greater health care efficiencies. GoodRx also operates HeyDoctor, an app that arranges doctor visits from an individual’s home.

Davis Polk & Wardwell LLP partner Shane Tintle said he expects more health care companies that cater to populations rather than individuals will join the IPO wave. He noted the August debut of primary care startup Oak Street Health Inc., which uses analytics to serve Medicare patients.

“There’s a good pipeline in the health care services space,” Tintle said.

Which Companies Will Thrive in a New Administration?

Shifts toward renewable energy could gain steam under a Biden administration, which has made reducing dependence on fossil fuels a priority. Companies and investors that have anticipated this trend may stand to benefit.

New Mexico solar panel company Array Technologies Inc. raised $1 billion in an upsized October IPO, and more clean energy firms could go public through alternative means. At least two blank-check companies priced IPOs last autumn with the intent of acquiring renewable energy businesses and taking them public in the next 18 months or so.

ArcLight Clean Transition Corp. priced a $250 million IPO in September, followed by Spring Valley Acquisition Corp., which raised $200 million in December. Both ArcLight and Valley Acquisition are backed by private equity investors with energy expertise. 

Several makers of electrical vehicles and related batteries also went public in 2020 through blank-check companies.

Blank-check companies, also known as special purpose acquisition companies, or SPACs, raise money in order to acquire private businesses and take them public, typically targeting industries that reflect the strength of their management.

“You’re certainly seeing a lot of SPACs with a focus on renewables and sustainability,” said Ropes & Gray LLP partner Paul Tropp. “People think that’s a sector ripe for opportunity.”

Capital markets attorneys say more renewable energy companies could raise capital through traditional IPOs as well, and public policy shifts in favor of clean energy could provide a tailwind.

“There needs to be an incredible amount of investment in order to achieve goals with respect to the energy transition,” Baker Botts LLP partner Mollie Duckworth said. “You’re going to need to see a lot of capital flow into energy tech and energy transition-related companies.”

Ropes & Gray attorneys added that it will be worth watching health care regulations under Biden, who may seek to bolster insurance coverage amid the pandemic, expand Medicaid or reduce prescription drug prices. Partner Michael Beauvais said companies that focus on these subsectors could see more interest from investors. 

Will the SPAC Attack Continue?

Perhaps the most notable change in 2020 capital markets was the explosion of SPACs. Historically, such offerings have generated a portion of IPOs, but in 2020 they accounted for most new issuances.

Pandemic-related uncertainty accelerated the boom in blank-check companies, which can enable target businesses to go public quicker and with more control over valuation. Companies targeted by SPACs negotiate deal terms directly with their acquirer, thus avoiding certain risks associated with a sometimes volatile IPO market.

Just how long blank-check mania will last is anyone’s guess, but many capital markets attorneys say the growth of this alternative path to public markets could have staying power. One key will be to watch the results of recent SPAC acquisitions and how their shares fare post-merger. If investors see positive returns, that could sustain momentum for new blank-check issuances.

“The next 12 to 18 months will govern what [SPAC activity] will look like on a go-forward basis,” David Brown, U.S. equity capital markets advisory leader at EY said.

Prior returns have been mixed. While some notable businesses that went public through SPACs, like DraftKings and Virgin Galactic, have rallied, shares of most companies that took this route since 2015 have declined, according to research firm Renaissance Capital.

Tintle of Davis Polk noted that it is uncertain whether there are enough companies looking to be acquired by a SPAC that are public-ready, meaning prepared for the rigors of U.S. Securities and Exchange Commission regulations and being answerable to shareholders. If the supply of acquisition targets falls, the pace of new SPACs could recede from its current high.

“To continue at the rate it is going would require a significant amount of high-quality, public-ready companies electing to go the SPAC route,” Tintle said. “I’m not sure confidence in that proposition is shared equally across the market.” 

Signs that the blank-check may have peaked surfaced in October, when more companies began downsizing deal terms, indicating that investor demand was softening. But then SPACs surged again in December and continue to attract varied sponsors, many with proven records.

Private equity firm The Gores Group in December completed its sixth blank-check IPO, raising $300 million. At the start of 2021, SPACs appear to remain a sizable force in capital markets.

“We’re aware of several high-profile sponsors that are looking to access the markets in the early part of 2021,” Tropp said. “So there continues to be significant momentum heading into the new year with repeat issuers and also debut issuers.”

Source: Law360 – 3 Questions Looming For The 2021 IPO Market

Source: https://spacfeed.com/3-questions-looming-for-the-2021-ipo-market?utm_source=rss&utm_medium=rss&utm_campaign=3-questions-looming-for-the-2021-ipo-market

SPACS

Event: TechGC SPAC & Direct Listing Virtual Forum

Avatar

Published

on

TechGC is a private, invitation only, organization for General Counsels of leading venture capital firms and venture-backed technology companies. Our mission is to drive innovation, education and mentorship in the legal industry while creating a strong peer group and community that supports each other for many years to come.

Our membership includes over 1,500 GCs across New York, San Francisco, Boston, Los Angeles, Chicago, and Seattle and we host quarterly private GC-only events across our six chapters including the TechGC National Summit and the FullStack GC Conference Series.

Source: https://spacfeed.com/event-techgc-spac-direct-listing-virtual-forum?utm_source=rss&utm_medium=rss&utm_campaign=event-techgc-spac-direct-listing-virtual-forum

Continue Reading

SPACS

Video: Betty Liu With Three Reasons Why SPACs Are So Popular

Avatar

Published

on

http://spacHero.com is the only #SPAC tracker with live stock, warrant prices and latest news are updated every 10 minutes.

Come get your daily dose of #SPACs at http://www.spacHero.com

🔥🔥🔥

Source: https://spacfeed.com/video-betty-liu-with-three-reasons-why-spacs-are-so-popular?utm_source=rss&utm_medium=rss&utm_campaign=video-betty-liu-with-three-reasons-why-spacs-are-so-popular

Continue Reading

SPACS

Internet Entrepreneur Patrick Grove Files for $250 Million SPAC

Avatar

Published

on

  • Catcha’s SPAC will focus on tech in Southeast Asia, Australia
  • It’s among the first Asia-focused SPACs by tech entrepreneurs

Patrick Grove, a serial entrepreneur in Southeast Asia who runs internet-focused investment company Catcha Group, is the latest figure to seek capital through a blank-check firm.

The 45-year-old Australian is listed as chief executive officer and chairman of Catcha Investment Corp., a special purpose acquisition company that filed to raise $250 million through an initial public offering on the New York Stock Exchange, according to a filing on Tuesday.

Grove is one of the earliest internet entrepreneurs in Southeast Asia. Since founding Catcha Group in 1999, he and co-founder Luke Elliott have launched several startups and brought six of them to a public listing or sale. Those include iProperty Group Ltd., which was acquired by Australian real estate website REA Group Ltd. in 2016, as well as iCar Asia Ltd. and Frontier Digital Ventures Ltd., which are listed on the Australian Securities Exchange. Grove is also known for co-founding streaming platform iFlix Ltd., which was acquired by Tencent Holdings Ltd. last year.

Prominent figures from the business and investing worlds have been rushing into the SPAC market over the past year, which marked a record in the U.S. SPACs are empty corporate shells whose sponsors raise money from investors and then look to buy into another business, usually a private one. Increasingly, investors are planning SPAC listings that will be injected with Asian assets down the road.

Several blank-check firms with prominent Asia backers have launched in the past months, including one backed by SoftBank Group Corp. and another by billionaires Peter Thiel and Richard Li. Both will target technology companies.

SPACs can provide companies with an easier alternative to going public than the traditional IPO route, which can be a riskier option when volatility is high, as it was last year. Merging with a SPAC also allows a company to pitch itself to investors using forward-looking financial figures, which isn’t allowed in a traditional IPO.

Catcha’s blank-check firm will target technology, digital media and fintech companies across the Asia-Pacific, particularly in Southeast Asia and Australia, according to the filing.

It has formed an advisory board consisting of well-known regional venture capitalists. They include Gobi Partners founding partner Thomas Tsao, 500 Startups Managing Partner Khailee Ng, Qiming Ventures partner Helen Wong, K3 Ventures founder MX Kuok and Jungle Ventures Managing Partner David Gowdey.

Source: Bloomberg – Internet Entrepreneur Patrick Grove Files for $250 Million SPAC

Source: https://spacfeed.com/internet-entrepreneur-patrick-grove-files-for-250-million-spac?utm_source=rss&utm_medium=rss&utm_campaign=internet-entrepreneur-patrick-grove-files-for-250-million-spac

Continue Reading

Aviation

Exclusive: Wheels Up in talks with SPAC to go public: sources

Avatar

Published

on

(Reuters) – Wheels Up Partners LLC is in talks to go public through a merger with blank-check acquisition company Aspirational Consumer Lifestyle Corp. in a deal which could value the private jet charter company at more than $2 billion, people familiar with the matter said on Monday.

Aspirational Consumer Lifestyle has engaged with potential investors to buy into a private investment in public equity, or PIPE, transaction to raise additional funding for the deal to invest in Wheels Up, the sources said.

The sources, who requested anonymity to discuss the transaction, cautioned that it is possible talks could still collapse. Aspirational Consumer Lifestyle and Wheels Up did not immediately respond to requests for comment.

Aspirational Consumer Lifestyle is a so-called special purpose acquisition company led by LVMH executive and veteran private equity investor Ravi Thakran. The SPAC raised around $225 million in an initial public offering (IPO) on the New York Stock Exchange in September. U.S. private equity firm L Catterton, where Thakran is chairman-emeritus of its Asia business, is a minority investor in Aspirational Consumer Lifestyle.

Wheels Up would be the latest company in the aviation sector to seek to merge with a SPAC in order to list its shares on the stock market.

Air taxi company Blade Urban Air Mobility agreed to merge last month with Experience Investment Corp. Reuters reported last week that electric passenger aircraft developer Joby Aero Inc is exploring a deal to go public through a SPAC merger.

A SPAC is a shell company that raises funds in an initial public offering (IPO) with the aim of acquiring a private company, which then becomes public as result of the merger. For the company being acquired, the merger is an alternative way to go public over a traditional IPO.

SPACs emerged last year as one of the most popular investment vehicles on Wall Street.

New York-based Wheels Up was founded in 2013. The company offers a three-tier membership program with sign-on fees ranging from $2,995 to $29,500 that allows members to rent private planes. It also operates aircraft sales and management businesses.

The company was valued at $1.1 billion in its most recent private fundraising in 2019, and its investors include Delta Air Lines Inc and venture capital firm New Enterprise Associates (NEA).

Source: Reuters – Exclusive: Wheels Up in talks with SPAC to go public: sources

Source: https://spacfeed.com/exclusive-wheels-up-in-talks-with-spac-to-go-public-sources?utm_source=rss&utm_medium=rss&utm_campaign=exclusive-wheels-up-in-talks-with-spac-to-go-public-sources

Continue Reading
NEWATLAS2 days ago

Lockheed Martin and Boeing debut Defiant X advanced assault helicopter

Blockchain4 days ago

Buying the Bitcoin Dip: MicroStrategy Scoops $10M Worth of BTC Following $7K Daily Crash

Blockchain4 days ago

Bitcoin Correction Intact While Altcoins Skyrocket: The Crypto Weekly Recap

Blockchain4 days ago

Canadian VR Company Sells $4.2M of Bitcoin Following the Double-Spending FUD

Blockchain4 days ago

MicroStrategy CEO claims to have “thousands” of executives interested in Bitcoin

Amb Crypto4 days ago

Monero, OMG Network, DigiByte Price Analysis: 23 January

Amb Crypto2 days ago

Former Goldman Sachs exec: Bitcoin ‘could work,’ but will attract more regulation

Amb Crypto4 days ago

Chainlink Price Analysis: 23 January

Amb Crypto3 days ago

Will range-bound Bitcoin fuel an altcoin rally?

Amb Crypto3 days ago

Bitcoin Price Analysis: 24 January

Amb Crypto2 days ago

Other than Bitcoin, Coinbase notes institutional demand for Ethereum as well

Amb Crypto5 days ago

Popular analyst prefers altcoins LINK, UNI, others during Bitcoin & Eth’s correction phase

Amb Crypto4 days ago

Bitcoin Cash, Synthetix, Dash Price Analysis: 23 January

Amb Crypto4 days ago

Why has Bitcoin’s brief recovery not been enough

Automotive4 days ago

Tesla Powerwalls selected for first 100% solar and battery neighborhood in Australia

Amb Crypto2 days ago

Chainlink, Monero, Ethereum Classic Price Analysis: 25 January

Amb Crypto4 days ago

Stellar Lumens, Cosmos, Zcash Price Analysis: 23 January

AI3 days ago

Plato had Big Data and AI firmly on his radar

Amb Crypto4 days ago

Why now is the best time to buy Bitcoin, Ethereum

Amb Crypto1 day ago

Bitcoin SV, Ontology, Zcash Price Analysis: 26 January

Trending