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Reuters

Fintech banker McLaughlin hunts bigger deal after upsized SPAC IPO

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NEW YORK (Reuters) – The blank check firm co-founded by one of the most prominent U.S. financial technology investment bankers will broaden its search for merger partners to companies worth up to $10 billion after pricing a larger initial public offering (IPO).

Steve McLaughlin started FT Partners in 2001 and since then, the fintech-focused investment bank has worked on mergers and acquisitions and public and private fundraising for the likes of BlackRock Inc, StoneCo Ltd and GreenSky Inc.

An alumnus of Goldman Sachs, McLaughlin and FT Partners have also been involved in advising a half-dozen firms in mergers with so-called special purpose acquisition companies (SPACs), most recently mobile bank MoneyLion’s $2.9 billion combination with Fusion Acquisition Corp.

Alongside Gene Yoon, founder of technology-focused investment firm Bregal Sagemount, McLaughlin is now sponsoring his own SPAC. Independence Holdings Corp. priced a $435 million IPO on Monday, having increased the number of units sold due to investor demand.

SPACs are shell companies that raise funds from investors to take a private company public.

Pulling in extra cash and fully exercising the greenshoe, a share allotment potentially sold in the days after an IPO prices, McLaughlin told Reuters on Tuesday, will allow Independence to target larger fintech companies, beyond the $5 billion maximum size previously considered.

He added a deal involving a company that processes payments between businesses, or one providing financial management services, would be likely for Independence.

“We provide an incredibly attractive option for a company as we’ve successfully taken many companies through this complex process, so we can give comfort to founders and investors along the way,” McLaughlin said.

Despite heightened investor interest in cryptocurrencies, McLaughlin said Independence wouldn’t be investing in a firm in that industry because most businesses are still too early in their development.

He added it was highly unlikely that Independence would end up merging with a client of his investment bank.

Source: Reuters – Fintech banker McLaughlin hunts bigger deal after upsized SPAC IPO

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Reuters

Exclusive: U.S. watchdog mulls guidance to curb SPAC projections, liability shield – sources

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The U.S. securities regulator is considering new guidance to rein in growth projections made by listed blank-check companies, and clarify when they qualify for certain legal protections, according to three people with knowledge of the discussions.

The previously unreported measures being weighed by staff at the Securities and Exchange Commission (SEC) would escalate its crackdown on the deal frenzy in special purpose acquisition companies, or SPACs, which it worries is putting investors at risk.

The SPAC market had already started to lose steam after the SEC earlier this month suggested warrants issued by SPACs should be accounted for as liabilities instead of equity instruments, and the potential new guidance could compound that slowdown.

Wall Street’s biggest gold rush of recent years, SPACs are listed shell companies that raise funds to acquire a private company and take it public, allowing targets to sidestep the more onerous regulatory checks of an initial public offering.

A record $100 billion has already been raised by U.S. SPACs – also known as blank-check companies – so far this year, while the value of SPAC mergers and acquisitions hit a record $263 billion, according to data from Dealogic.

In the past year, the likes of sports betting platform DraftKings Inc (DKNG.O), electric truck maker Nikola Corp (NKLA.O) and Playboy owner PLBY Group (PLBY.O) have gone public through SPAC mergers.

The boom has drawn scrutiny from the SEC which has issued a number of warnings over SPAC marketing and investor communications.

Among the concerns it has flagged are SPAC earnings growth projections. SPAC sponsors say the projections are important for investors, especially when targets are unprofitable startups, but investor advocates say they are frequently wildly optimistic or misleading.

In addition, the SEC is considering guidance aimed at clarifying when a key liability protection for such forward-looking statements applies to SPACs, the three sources said.

SAFE HARBOR

The legal safe harbor created by the 1995 Private Securities Litigation Reform Act protects listed companies from shareholder litigation provided forward-looking statements are made in good faith, identified as such and couched in cautionary language.

While the safe harbor does not apply to IPOs, SPAC sponsors have generally operated on the basis that it does apply to SPAC deals, and have leaned on it heavily to issue growth projections.

But some attorneys say the SEC’s rules on the safe harbor are ambiguous, and the SEC’s acting director of corporation finance, John Coates, earlier this month cast doubt on whether it applies to SPAC deals.

He said SPAC targets “have no more of a track record” than private companies doing IPOs, raising questions about the potential liability of sponsors and other parties involved in the transactions.

The SEC guidance would aim to clarify the conditions upon which the safe harbor applies, the sources said. Those changes would likely prompt more due diligence and caution on the part of SPAC dealmakers wary of incurring liability, the people said.

The SEC has not substantively amended the definition of “blank-check company” since the passage of the 1995 law, the agency has said.

The changes are being discussed by staff in the SEC’s corporation finance division but it was unclear if the agency’s leadership would back them, said one of the sources.

The sources declined to be identified because the discussions are private.

NEUTRAL STANCE

While Coates has said there are “significant” issues with some SPAC deals, he has also emphasized he is neither pro- nor anti-SPAC.

In addition to the recent accounting guidance and warnings over projections, marketing and investor communications, the SEC has opened an inquiry into how Wall Street banks are managing the deal risks and is probing electric vehicle-makers that went public via SPACs. read more

The SPAC boom has been fueled in part by easy monetary conditions as central banks have pumped cash into pandemic-hit economies, while the SPAC structure provides startups with an easier path to go public.

But the SEC scrutiny may be starting to tamp down the market. SPACs raised roughly $17 billion during the first 20 days of January, but that fell to $2.5 billion during the corresponding period in April, according to Dealogic.

RBC Capital Markets co-heads of SPAC coverage, Amir Emami and Michael Ventura, said valuations had been stretched during the SPAC boom and that, as with other frothy markets in the past, the sector was due a “reset.”

“And then when there’s a reset, it’s a hard reset. So we’re going through that reset right now,” said Ventura.

Source: Reuters – Exclusive: U.S. watchdog mulls guidance to curb SPAC projections, liability shield – sources

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Blockchain

India to have a ‘window’ for Bitcoin, says minister amid crypto ban FUD

The Ministry of Finance of India continues to form a careful position on private cryptocurrencies.

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The minister of finance of India, Nirmala Sitharaman, has given a ray of hope for the Indian cryptocurrency community as more fear, uncertainty and doubt circulate regarding a supposedly impending ban on digital assets. 

In a Saturday interview with India Today, Sitharaman emphasized that the ministry does not plan to shut off Indian innovations associated with Bitcoin (BTC) and its underlying blockchain technology.

“From our side, we are very clear that we are not shutting all options off. We will allow certain windows for people use, so that experiments on the blockchain, Bitcoins or cryptocurrency […] and fintech, which depend on such experiments, will have that window available for them. We are not going to shut it off,” she said.

Sitharaman said that the ministry is finalizing a cabinet note on crypto as India continues formulating its official stance on the asset class. “It is nearing completion, and then it will be taken to the cabinet. The Supreme Court had commented on cryptocurrency. We are very clear that the Reserve Bank of India will take a call on an official cryptocurrency,” she said.

After India’s supreme court lifted a crypto banking ban one year ago, reports of a new ban started circulating in early 2021. In February, another anonymous Indian official claimed that the government was about to introduce a complete ban on crypto, giving investors up to six months to liquidate their holdings.

On Sunday, Reuters published a report citing an anonymous senior government official who claimed that India is preparing to enforce a blanket ban on crypto and impose major penalties on rule-breakers. As part of an alleged bill, India is planning to criminalize “possession, issuance, mining, trading and transferring crypto-assets,” the source claimed.

Despite reports of a ban from anonymous sources continuing to surface, Sitharaman said in early March that the ministry wants to form a “calibrated” stance on digital assets. 

Nischal Shetty, founder of local crypto exchange WazirX, seemed optimistic about Sitharaman’s comments in a tweet, stating that it is time for the Indian crypto community to build. 

The RBI and the Ministry of Finance did not immediately respond to Cointelegraph’s request for comment.

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Source: https://cointelegraph.com/news/india-to-have-a-window-for-bitcoin-says-minister-amid-crypto-ban-fud

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Reuters

Former Disney executives Mayer and Staggs plan new SPAC – source

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(Reuters) – Former Walt Disney Co executives Kevin Mayer and Thomas Staggs plan to raise $300 million in an initial public offering for a new special purpose acquisition company (SPAC), a person familiar with the matter said on Thursday.

The duo’s first SPAC, Forest Road Acquisition Corp, agreed a three-way merger last week with fitness companies Beachbody LLC and Myx Fitness LLC that was valued at around $2.9 billion.

Former basketball star Shaquille O’Neal, who is also on the board of directors at pizza chain Papa John’s International Inc, and Martin Luther King III, the oldest son of civil rights leader Martin Luther King Jr, are working for Forest Road II as a strategic advisor and a director, respectively, the source said.

Mayer and Staggs will serve as co-chief executives and co-chairmen of the new SPAC, the source said. They had worked with the first Forest Road SPAC as a strategic advisor and director, respectively.

The source requested anonymity ahead of a regulatory disclosure on the SPAC IPO.

Mayer was Disney’s top streaming executive before he left the media giant last year to become the chief executive of popular video app TikTok. He departed the company three months after joining. Staggs worked at Disney for 26 years and held various roles including chief operating officer.

SPACs are shell companies that raise funds to take a private company public. They have gained immense popularity since last year, as they allow companies to go public by eschewing traditional IPOs.

A string of high-profile SPACs have been raised in the last 12 months, including by financial investors William Ackman and Barry Sternlicht, former U.S. House Speaker Paul Ryan and ex-NFL quarterback Colin Kaepernick.

Source: Reuters – Former Disney executives Mayer and Staggs plan new SPAC-source

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Reuters

Global firms raise $546 billion in January as SPAC frenzy continues

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(Reuters) – Companies raised $546 billion from new bond and share issues in January, as a flood of central bank money-printing and recovering stock markets brought record numbers of new listings, SPAC deals and share sales, Refinitiv data showed on Wednesday.

The numbers included $106.15 billion in initial public offerings (IPOs), SPACs and secondary offerings, with the amount of money raised by SPACs alone soaring 20 times to $24.26 billion from a year earlier, the data showed.

Companies also raised nearly $439.9 billion in corporate debt in January, a 5% fall since the same period last year, but still the second largest January in 25 years.

A SPAC, a shell company that raises money in an IPO before later merging with a privately held company to take the latter public, has become many investors structure of choice over the past year.

January’s haul was already 30% of a total $79 billion raised by SPACs in the whole of 2020.

Traditional IPO volumes in the United States, however, remained higher than SPACs in January, hitting a 25-year high of $33.9 billion.

Some 47% new bond and share issues were U.S. offerings in January this year, with China second with $23.96 billion.

Nasdaq was the clear winner among exchanges, with 167 issues raising $41.12 billion, followed by the New York Stock Exchange and the Hong Kong Exchange a close third, with both raking in a little more than $18 billion respectively.

That was in stark contrast to European financial hubs London and Frankfurt, which raised $4.29 billion and $1.72 billion respectively.

Chinese online video company Kuaishou Technology is the biggest IPO globally so far this year, raising $5.42 billion in Hong Kong, followed by Polish parcel locker business InPost SA which raised $3.40 billion in Amsterdam.

Source: Reuters – Global firms raise $546 billion in January as SPAC frenzy continues

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