Why invest in SPAC
Versatile portfolio play - offering downside protection (100% of IPO funds in escrow in T-bills) and upside potential (deriving from the eventual business combination), plus derivative optionality through the free warrant. Effective at stabilising portfolios as – until the business combination – SPACs have a defensive risk profile and are uncorrelated from stock market performance. Nasdaq-listed SPACs have proven to be highly liquid, due to cash in escrow underlying the common, with both institutional investors (eg. SPAC-only funds) and market makers acting as block trade counterparties. The free warrant at IPO offers certain return when traded in market.
Alignment Of Interests
- INVESTOR: Free-risk investment with at least 100% redemption and potential upside, plus optionality. Participation in IPO vs secondary market guarantees fixed price, free warrant and no commission.
- SPONSOR: Immediate seizing of acquisition opportunity, cash in hand. Repeat SPAC sponsor teams profit from pipeline, thus shortening lead time to business combination.
- TARGET: Easier and faster route to market listing vs traditional IPO or Private Equity takeover. Maximum capital structure flexibility.
Receive unit: common @ usd 10 + free warrant, No commission, Free trading from day one.
- SECONDARY MARKET:
Trade unit, common, warrant. Market commissions and prices apply. Common price is stable. Warrant statistically grants return.
- BUSINESS COMBINATION:
Sell unit/common on market. Redeem common @ usd 10. Stay in Newco by holding unit, holding common or exercising warrant.