{"id":1156,"date":"2020-09-30T08:00:03","date_gmt":"2020-09-30T01:00:03","guid":{"rendered":"https:\/\/bitesizebkk.co\/?p=1156"},"modified":"2020-09-30T18:20:04","modified_gmt":"2020-09-30T11:20:04","slug":"bitesize-finance-spac-attack","status":"publish","type":"post","link":"https:\/\/bitesizebkk.co\/bitesize-finance-spac-attack\/","title":{"rendered":"Bitesize Finance: What is “The SPAC Attack” ?"},"content":{"rendered":"

Prolific tech investor Bill Gurley called SPAC the <\/span>topic du jour<\/span><\/a> in Silicon Valley, and he\u2019s right. Special purpose acquisition company, the term is a mouthful. In layman terms, it\u2019s another word for a blank check company.\u00a0<\/span><\/p>\n

A SPAC is a blank-check company that is formed for the sole purpose of merging or acquiring other companies<\/strong><\/p>\n

Example: Entrepreneur <\/span>Chamath Palihapitiya<\/span><\/a>\u2019s <\/span>Social Capital Hedosophia Holdings<\/span><\/a>, in which he raised US$600 million for, was ultimately used to take a <\/span>49% stake<\/span><\/a> in Richard Branson\u2019s Virgin Galactic.\u00a0<\/span><\/p>\n

Now, a SPAC is not a new concept and has been around for quite some time. However, it has risen to mainstream adoption and popularity this year, particularly post pandemic. In 2020 alone, over <\/span>US<\/span>$34 billion<\/span><\/a> have been raised via SPACs in the US. And we\u2019ve got a couple of months left to go .Experts say it is SPACs will likely finish the year over 300% higher compared to 2019. That\u2019s a significant increase.<\/span><\/p>\n

Maybe you\u2019ve heard it mentioned in passing or read about it somewhere and suddenly Peter Thiel has set up his own SPAC. For a lot of \u201cindustry outsiders\u201d, this brought the SPAC attack more into the mainstream.<\/span><\/p>\n

We\u2019ll be honest, we\u2019re learning about SPAC as we go. Read ahead to know more about what it actually is, why the IPO model might be broken and when (if ever) we can expect a Thai company to tread this path.\u00a0<\/span><\/p>\n

What is SPAC<\/i><\/b><\/h3>\n

<\/b>A SPAC is an investment vehicle that essentially functions as a blank cheque company that typically raises capital through private investors before raising money through an IPO. With its IPO capital, it then looks for private firms to buy. The private firm then becomes acquired by the Spac and is then also publicly listed.<\/span><\/p>\n

Everyone including high-profile names on Wall Street such as hedge fund billionaire Bill Ackman and former Citigroup dealmaker Michael Klein have turned to SPACs recently.<\/span><\/p>\n

Some are even going as far to saying that the IPO model is <\/span>broken<\/span><\/a>. According to investor Bill Gurley, the traditional IPO process does not use a market-based approach to efficiently match supply and demand and to discover price. <\/span><\/p>\n

What else? Access. Most potential buyers of stocks are blocked out of the IPO process. Access is limited to the best clients of the investment bank.<\/span><\/p>\n

A SPAC directly tackles these shortcomings.\u00a0<\/span><\/p>\n

Benefits<\/b><\/a> of a SPAC compared to a traditional IPO:\u00a0<\/b><\/p>\n