Below is a daily summary of links to the latest SPAC news and rumors gathered across the web.
Japan and China hope to tap into the SPAC market, private companies gain leverage, and Virgin Galactic gets sued
Japan Mulls Allowing Blank-Check Company Listings, Nikkei Says
Japan is considering changing its rules to allow IPOs by blank-check companies in the country, according to the Nikkei.
The country’s Financial Services Agency, its Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange will begin discussions this summer, the paper reported. The cabinet plans to include the issue in its growth strategy plan in June, it said, and listing may become possible as soon as next year.
Mainland Chinese Tech Startups Hope to Tap SPAC Trend to Go Public
Tech start-ups backed by Legend Holdings, Baidu are among those exploring options regarding SPACs industry insiders told the South China Morning Post.
“We are in talks with more than 10 tech companies with businesses from electric vehicle components, e-commerce technology, biotech to media. Many of them are in Beijing’s tech hub, Zhongguancun,” said Jason Wong, a SPAC sponsor and partner at Whiz Partners Asia, the Asian affiliate of Japan’s Whiz Partners.
SPAC Pullback Pressures Creators to Find Quality Mergers
Because of the market reversal, some analysts now expect private companies and investors in SPACs to have more leverage when negotiating deal terms with blank-check firms. The shift shows how many on Wall Street and in Silicon Valley are grappling with the unprecedented market environment created by SPACs, which were a rarely used alternative to traditional IPOs before late 2020 and are now evolving quickly.
“People are getting a lot more choosy,” said Kristi Marvin, founder of data and research provider SPACInsider.
The Growth of SPAC-Related Litigation
The growth in SPAC-sponsored IPOs has been matched by a rise in SPAC-related litigation, and the trend is likely to continue, a report by Cohen & Gresser shows. Although these actions generally are in the early stages, it suggests that shareholders and the securities class bar are actively monitoring SPACs.
In New York alone, from October 2020 through April 2021, over 60 SPAC-related lawsuits were filed in state court. The majority of those lawsuits generally allege that SPAC directors breached their fiduciary duties to shareholders by providing allegedly inadequate disclosures regarding proposed de-SPAC mergers.
Virgin Galactic Sued by Investor Over SPAC’s Accounting Issues
Virgin Galactic Holdings Inc. was sued by an investor who claims he lost money when the space-tourism company announced that it would restate its results due to regulatory guidance about the accounting treatment of warrants.
Investor Shane Lavin said in the lawsuit filed Friday in federal court in Brooklyn that Virgin Galactic and its executives knew that the results they were reporting were wrong. They are seeking class-action status for their lawsuit.