2023 SPAC Listings for your Watchlist
Over the course of the stock market hysteria of the COVID economy, SPACs, or Special Purpose Acquisition Corporations, became a household name for retail investors across the globe. Once an arcane niche reserved for capital market veterans, high-profile venture capitalists like Chamath Palihapitiya helped familiarize the broader market with one of the “backdoor” methods for listing on a US exchange. The benefits–its cheaper, potentially faster, and requires far less regulation than a traditional IPO, particularly so for foreign listees. The downside–significantly more uncertainty as to the final fate of the transaction, and higher ST volatility for companies that successfully list.
In 2020/21, a record number of SPAC IPOs were completed on US exchanges, reaching around 250 per annum during the peak of the COVID bull market. Conversely, 2022 has seen 15 SPAC IPOs withdrawn (as opposed to 1 in ’20 and 10 in ‘21), and saw only a handful of finalized listings overall.
That said, its a near year and a new direction for the market. Despite unencouraging macroeconomic conditions, here are three SPACs with high chances of completing IPOs that I’m feeling bullish about:
- DigiAsia/Stone Bridge Acquisition Corps (APAC): DigiAsia is a Jakarta-based finTech and financial services providers that has announced a business combination agreement with APAC. DigiAsia is valued at around $500M, and significantly counts Mastercard as one of its primary investors. Before the merger agreement, DigiAsia closed a $14.5M investment led by Reliance Capital Management at a ±$450M post money valuation. I’m feeling optimistic about DigiAsia because they’re managed expectations and explicitly stated the goal of the NASDAQ listing is to access more capital for, at this point, regional (ASEAN) expansion. For a large, densely populated, and chronically unbanked area of the world, this listing has serious potential given pre-existing momentum behind fintech ventures.
- HUB Security/Rainier Acquisition Corps (RNER): HUB Security is a confidential computing disruptor founded in 2017 and currently traded on the Tel Aviv Stock Exchange. After a flurry of high-intensity M&A activity in 2021, last year HUB kickstarted its NASDAQ listing process and now requires one last regulatory submission to Israeli authorities before the SPAC listing is completed. HUB’s value proposition lies in its disruptive technology which stands to disrupt the world of cyber security as we know it. With an increasingly sophisticated threat landscape, HUB’s long-term success depends on its ability to deliver on some $500M of forecasted deal flow for the coming year. Meanwhile keep on eye out for HUBC to commence trading on NASDAQ by the EOM.
- World View/Leo Holdings Corps II (LHC): This past Friday, Worldview announced its entry into a definitive merger agreement with LHC, with strategic services provided by New Vista Partners. The pro forma enterprise value of the combined company is approximately $350 million, and the transaction may provide up to $121 million of gross proceeds to the combined company. Worldview is a space tech startup whose focus is global stratospheric exploration and space tourism. In terms of hitting on a long-term macrotrend, WorldView is aggressively positioned to join the ranks of SpaceX, Virgin Galactic, and Maxar is pushing the frontiers of space and upper atmosphere exploration.
Of these three companies, HUB is by far the closest to an IPO and has the highest likelihood of a successful listing. While its a bit too early to tell for DigiAsia and WorldView, I will be adding those to my SPAC watchlist and monitoring closely for future updates. While the SPAC bubble may have burst, the ones that successful make it to market have proven their “survival of the fittest ‘’ credentials demanded by today’s market. Fingers crossed this is the case for the three plays I touch on above. DYOR, this is the author’s personal opinion and not financial or investment advice.