PSPC Executives Rewrite Equity Investment Terms
Special Purpose Acquisition Company (SPAC) buyers are considering stricter and more aggressive terms as the popularity of these types of investments increases, Bloomberg reported.
Some of those considering higher restrictions include bosses like SoftBank founder Masayoshi Son and Silicon Valley investor Vinod Khosla, according to the report.
And this week, at least three PSPCs reviewing U.S. listings – the Vision SoftBank Fund, Ken Lerer, co-founder of the Huffington Post and technology investor Vector capital – changed their agreements to settle mandates this week, Bloomberg reported.
Usually, SPACs offer units at $ 10 each with one share and a fraction of a warrant, which gives holders the right to purchase another share for $ 11.50. When they make the decision to sell stocks without warrants, they end up reducing the risk of further dilution, according to Bloomberg.
It shows how well-known issuers now have the power to set their own agendas, even amidst many other transactions, Bloomberg reported.
The frequency of these changes is increasing in recent times. Other companies, like Dragoneer Investment Group, made the changes with the company’s recent SPAC starting in November, which also removed the warrants, Bloomberg reported. Khosla, meanwhile, is warrantless on all of his company’s PSPCs announced since last month.
Other companies, including Thomas bravo, software buyout, growth investor Altimeter capital and Richard Li, the Hong Kong-based billionaire, have also achieved the same types of structures, Bloomberg reported.
The IPO market, having been assumed to weaken during the pandemic, has been scorching lately, with PSPCs making up a large chunk of the total.
Analysts said there were around 480 initial public offerings (IPOs) in U.S. markets alone, up more than 100% from the previous year.
So far, around 189 PSPCs have been released to the public in 2021 alone, well surpassing the 248 views in the past year.