What Is a Special Purpose Acquisition Company (SPAC)? A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as "blank check companies," SPACs have been around for decades. In recent years, they've become more popular, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019. In 2020, as of the beginning of August, more than 50 SPACs have been formed in the U.S. which have raised some $21.5 billion. KEY TAKEAWAYS A special purpose acquisition company is formed to raise money through an initial public offering to buy another company. At the time of their IPOs, SPACs have no existing business operations or even stated targets for acquisition. Investors in SPACs can range from well-known private equity funds to the general public. SPACs have two years to complete an acquisition or they must return their funds to investors How a SPAC Works SPACs are generally formed by investors, or sponsors, with expertise in a particular industry or business sector, with the intention of pursuing deals in that area. In creating a SPAC, the founders sometimes have at least one acquisition target in mind, but they don't identify that target to avoid extensive disclosures during the IPO process. (This is why they are called "blank check companies." IPO investors have no idea what company they ultimately will be investing in.) SPACs seek underwriters and institutional investors before offering shares to the public. The money SPACs raise in an IPO is placed in an interest-bearing trust account. These funds cannot be disbursed except to complete an acquisition or to return the money to investors if the SPAC is liquidated. A SPAC generally has two years to complete a deal or face liquidation. In some cases, some of the interest earned from the trust can be used as the SPAC's working capital. After an acquisition, a SPAC is usually listed on one of the major stock exchanges. Advantages of a SPAC Selling to a SPAC can be an attractive option for the owners of a smaller company, which are often private equity funds. First, selling to a SPAC can add up to 20% to the sale price compared to a typical private equity deal. Being acquired by a SPAC can also offer business owners what is essentially a faster IPO process under the guidance of an experienced partner, with less worry about the swings in broader market sentiment. SPACs Make a Comeback SPACs have become more common in recent years, with their IPO fundraising hitting a record $13.6 billion in 2019—more than four times the $3.2 billion they raised in 2016. They have also attracted big-name underwriters such as Goldman Sachs, Credit Suisse, and Deutsche Bank, as well as retired or semi-retired senior executives looking for a shorter-term opportunity. Examples of High-Profile SPAC Deals One of the most high-profile recent deals involving special purpose acquisition companies involved Richard Branson's Virgin Galactic. Venture capitalist Chamath Palihapitiya's SPAC Social Capital Hedosophia Holdings bought a 49% stake in Virgin Galactic for $800 million before listing the company in 2019. In 2020, Bill Ackman, founder of Pershing Square Capital Management, sponsored his own SPAC, Pershing Square Tontine Holdings, the largest-ever SPAC, raising $4 billion in its offering on July 22. Strategies to Help Minimize Investment Taxes A strategic approach to investing can help you maximize your retirement income while minimizing your investment taxes. With no commissions and no financial incentives, Vanguard Personal Advisor Services® can develop a goal-driven plan to help you do just that. You’ll also have access to personal service at a low cost. Learn more about how you can access personal financial advice and start the conversation. Special Purpose Acquisition Company (SPAC) Definition (investopedia.com)
(IPOE), Goldman Sachs Group, Inc. (The) (NYSE:GS) - SoFi Merging With Palihapitiya-Backed IPOE SPAC | Benzinga Fintech company SoFi is going public via one of the most well-known names in the SPAC community. The SPAC Deal: SoFI announced a SPAC merger with Social Capital Hedosophia Holdings V IPOE 45.92%, led by Chamath Palihapitiya. The merger values SoFi at an equity value of $8.65 billion post-money. SoFi will receive $2.4 billion in cash proceeds, including a $1.2 billion PIPE led by Palihapitiya. SoFi is being valued with an enterprise value of $6.5 billion. Palihapitiya and SoFi CEO Anthony Noto have known each other for over 10 years. The duo discussed the deal in an appearance on CNBC’s “Halftime Report." “He’s completely money in the bank,” Palihapitiya said. The deal was done with Social Capital and Palihapitiya due to their experience with SPACs, according to Noto. “They’ve done this a number of times, they’re very experienced,” Noto said. SoFi chose to go public via a SPAC due to the ability to educate investors more affordably throughout the merger process compared to the traditional IPO route. About SoFi: The company’s mission is the help people achieve financial independence by getting their money right. SoFi offers a wide range of services that include loan refinancing, mortgages, personal loans, credit cards, insurance, investing and deposit accounts. SoFi also owns and operates Galileo, one of the leading technology infrastructure services that helps power the back-end of several of the fastest growing financial services providers. Galileo has around 50 million accounts on its platform. Palihapitiya pointed out that Galileo customers include Robinhood, Chime, Dave.com and MoneyLion. The enterprise banking infrastructure platform is called “The AWS of fintech” by Palihapitiya. Noto has experience working with companies like Goldman Sachs GS 2.76%, Twitter TWTR 3.05% and the National Football League. Financials: SoFi had 1.8 million customers last year and said it's forecasting to hit 3 million in 2021, representing year-over-year growth of 66%. Revenue for SoFi was $200 million in the recent third quarter. Fiscal 2020 revenue is estimated to hit $621 million. The company sees fiscal 2021 revenue hitting $980 million, representing year-over-year growth of $980 million. Revenue estimates call for $3.67 billion by fiscal 2025. SoFi is expected to hit adjusted EBITDA profitability in fiscal 2021 with an estimated $27 million. Growth Ahead: For some consumers, it’s hard to get loans, a problem which SoFI is focused on. Palihapitiya said SoFi believes in advancing financial services for middle America. “SoFi has fixed all these things,” Palihapitiya said. “The acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability." Upselling to existing customers has helped SoFi with growth and remains a major catalyst. Sixty-five percent of home loans for SoFI are upsells from existing members. Twenty-four percent of all products sold by SoFi are upsells from existing customers, according to Palihapitiya. SoFi also recently received preliminary conditional approval for a national bank charter, which could be a catalyst for the company. Financial projections are likely to change with the bank charter approval. IPOE Price Action: Shares of Social Capital Hedosphia Holdings V were up 30% before being halted before the CNBC appearance. Shares are up 54% to $18.64 at time of publication.
barchart.com will come up with lists of stocks in hot areas of the market. And they got one for SPACs https://www.barchart.com/stocks/sectors/spac-stocks finviz screener for "Shell Companies" https://finviz.com/screener.ashx?v=111&f=ind_shellcompanies
Payoneer SPAC Merger? 5 Things to Know About the Payments Play as FTOC Stock Soars on Buzz Payoneer may be gearing up to go public via a merger with special purpose acquisition company (SPAC) Ftac Olympus Acquisition (NASDAQ:FTOC) and FTOC stock is soaring on the talk. According to recent rumors, Ftac Olympus Acquisition is preparing a round of funding that will support its merger with Payoneer. Unnamed sources spoke with Bloomberg about the matter. They remained anonymous due to the nature of the information and note a deal has yet to be finalized. News of a possible SPAC merger between Ftac Olympus Acquisition and Payoneer caught the eye of investors hungry to make a profit. Those traders boosted shares of FTOC stock up with heavy trading before markets closed. FTOC closed out normal trading hours with almost 17 million shares traded. Its daily average trading volume is only about 390,000 shares. Keeping all the information above in mind, it’s no surprise that some investors want to know more about Payoneer ahead of any official SPAC merger announcement. Fortunately for them, we’ve got a quick primer below. Payoneer is a payment processing company that allows customers and businesses to easily transfer funds to each other around the world. It was founded in New York City in 2005. It operates in roughly 200 countries with a total of 1,500 employees spread across 21 countries around the world. Several investors, include CBC, Viola Ventures, Pingan, Wellington Management, and others, back the company. One of its biggest partners is Airbnb (NASDAQ:ABNB), which uses Payoneer as its payment provider. FTOC stock was up 3.8% after-hours Wednesday. On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. Payoneer SPAC Merger? 5 Things to Know About the Payments Play as FTOC Stock Soars on Buzz | InvestorPlace The way I like to play SPAC is to find the SPACs under $11s and just wait patiently for the deal. I got some FTOC at $10.67 and it closed at $13.77 on the rumor, this one maybe paying off for me
Is there something where if the SPAC doesn't make an acquisition, then they give you back $10 per share?
Yeah I think you are correct, so buying SPAC near 10s should have rather low risk although it might take forever to wait for a deal
Got in FPAC at $10.48 today and ETAC at $10.44 yesterday, will see if they slowly grind higher before any deal is done
It was announced Tuesday that space launch company Astra will merge with SPAC Holicity Inc. (HOL). The stock surged from around $10 to almost $20 this week. I love the "new space age" investment theme and this might be a company to play it with, as not too many companies in the space are listed yet. Astra wants to launch monthly payloads into orbit by year-end.
