Partner content in association with DFIN

‘We are not just facilitating deals but advising clients’ – DFIN’s Craig Clay

DFIN's Craig Clay

Through the pandemic Craig Clay President of Global Capital Markets at DFIN believes that the firm has emerged as the ‘filing engine of the COVID-era’. In conversation with DealStreetAsia, Clay weighs in on how the US election will impact dealmaking, the rise of SPACs, virtual due diligence and how having a risk and compliance solutions partner can smoothen the path to an IPO and beyond. Edited excerpts from an interview

Can you please give us your perspective on how the recently announced results of the US elections are likely to affect deal making through the next year and beyond?

Following the post-election period, it appears the US will have a divided government, and the market loves it.

President-elect Biden is forming his various teams, including his economic team, and I expect that monetary policy won’t change. The market has several backstops – the fiscal stimulus (which will ultimately happen again), the Fed standing by to pump additional money into the economy, and also the proven resilience of corporate America – the speed at which many companies are recovering from the Covid-induced downturn, even as the pandemic continues to weigh on the broader economy is incredible.

Those actions will only reinforce investor confidence that there will not be a dramatic change in policy.

We’ve experienced challenging times before and have made it through and as we’ve seen so far, December will be a very strong month for IPOs, highlighted with Airbnb and Doordash here in the States.

One of the most ubiquitous subjects that came up for discussion this year because of the pandemic was virtual due diligence. What are some of the workarounds that you recommend?

There was a recent Wall Street Journal article about CFOs getting comfortable with never meeting the management teams of companies that they want to acquire. And instead, using virtual data rooms (VDR) to exchange data and video.

The difference in DFIN’s product is that we have built-in Artificial Intelligence with pre-trained provisions to accelerate due diligence. It’s not machine learning, but real AI that understands what an M&A deal needs to look for – for example, change of control or patent information. The AI automatically offers those results to our users.

For sellers, our Venue virtual data room also allows for privacy assessment and redaction that meet the most stringent privacy laws, including GDPR.

Many investors we have spoken to in Asia still prefer physical meetings. For instance, one of them said they were still doing deals in Indonesia but mainly because they had an office in that country. What advise do you have for such investors?

I believe that in countries like Indonesia, where the physical data room is more commonplace – you’ll see a trajectory similar to what we experienced in the United States, when we first launched.

At that time, our competition was a physical room.  Today, most documents are electronic. Creating a physical room involves the inverse – converting the electronic into the physical. In this New Norm we’re all living in, technology will play a more vital role in the process, along with humans, in order to conduct due diligence.

Financial advisors based in Indonesia or anywhere else will be able to use a digitised version – which is often available anyway – in a VDR such as our Venue product.

 A lot of IPOs especially across Asia Pacific were postponed in the wake of the pandemic. What are some of the concerns affecting the firms which are actually going ahead with a public listing?

We started off pretty strong in January and February, and then everything was postponed due to the pandemic.

There was a drop in Q2 which was more than made up for by Q3, which speaks to the market’s resilience. As companies found their footing, IPOs and even M&As have made a strong return.  In Asia-Pacific, from 2019 through the three quarters of 2020, the listings are up 22 per cent. Obviously, Asia-Pacific was dealing with the pandemic long before we were in the United States. As a region, it has bounced back, and been able to contain COVID-19 most effectively.

Q4 will see extraordinary growth fueled by the likes of DoorDash and AirBnB. People need a place to invest, and that money has found a home in these new listings.

SPACs (special purpose acquisition companies) have been on an upward trajectory. Is this likely to be a trend through at least the early part of the next decade?

SPACs have become not just a viable vehicle but a place where the combination of management teams, great ideas and money can create an entity that can then pursue acquisitions.  They have become the darling of the capital markets because they are efficient and effective.

SPACs will make up 50 per cent of total IPOs in 2020 and in fact, this year’s total will exceed 2019, which was also a record year. Through October, we had more SPACs than we had in the entirety of 2019. As of mid-September 2020, 95 SPACs – with a valuation of approximately $35 billion – had priced year to date, shattering all previous records. While we expect to see a pause in 2021 as deals are digested, activity should still exceed pre-2020 levels.

For the full year of 2019, 59 SPACs had priced, and even this represented a sizeable increase over 46 in 2018 and 34 in 2017. SPACs in Asia have grown eightfold since 2015.

What are some of the factors that are driving this growth?

The financial terms and the efficiencies.  It’s a way for money to find a place to invest in individuals and teams, and then to look out into the private and public markets for acquisitions. There’s a lot of money that wants to earn outsized returns versus what you can get by putting it into the bank. SPACs provides a mechanism with which to make that happen on a larger scale. It really is allowing M&A to be a part of the IPO product line.

So, what’s your prediction for next year? Will it be back to business as usual?

We will continue to see a K-shaped recovery. At the top end will be industries that are doing phenomenally well – technology, medical and life sciences. At the lower end are travel, leisure and restaurants. All verticals will provide an active opportunity for deals whether it come from Covid-hot sectors or post-pandemic value plays. I see optimism in the market that is ready to bet that in the second half of 2021, you will start to see things coming back to a new normal.

Will there be any changes in deal making?

People will fly to fewer places and meet with fewer people. More people will participate virtually via video.  We have realised the extraordinary efficiency of being in one place versus the inefficiency of travel. We will come to a place that optimises both. The new normal will be a combination of virtual meetings with fewer people traveling.

Technology underpins this flexibility. In deal making, we can use video, VDRs and our ActiveDisclosure product that allows us to collaborate on documents, edit in real time and pull it in from the ERP solution.  Technology will only accelerate this transformation in 2021 and beyond.

What have been some of the most significant opportunities and challenges in the VDR space?

The first is security. DFIN is focused on privacy and has the best tool for privacy assessment ensuring that personal identifiable information (PII) is known and redacted. We think we have the best mousetrap for that.

But it’s not just for PII; it can be used for intellectual property information in a data room – such as genome data for a life sciences company – in the early stages of a sale. You can use those same tools to ensure that you are not revealing things that you don’t want revealed.

Technology also enhances efficiency and confidence. Specific to Asia, premier technology platforms, such as secure data rooms, are giving clients the confidence to transact. Of course, many storage technology companies will brand themselves as a VDR, when in fact they’re just storage.

A VDR must have the security, AI and privacy: no one else has that at scale. That is what DFIN provides.

What do you believe sets DFIN apart?

There are a couple of important factors: Our financial stability and global scale. That’s important because most deals now have a cross-border element. You also need scale to invest in technology and innovation, and to provide data security.

Our domain expertise and world class service are also major factors.  For example, we know what needs to be done to list in Hong Kong from an IPO perspective, which is different from listing in the United States. We offer a full-service platform to support our clients from initial creation and fundraising to public listing and M&A and beyond. At the heart of it all, we are not just facilitating deals but advising clients.

While on public listings, the sudden delay in Ant Group IPO was among the most keenly discussed developments, especially in Asia. Considering the comprehensive role that DFIN plays, is keeping abreast of changes in government regulations and policies part of the remit?

Absolutely and DFIN is an expert in global regulatory requirements.  Our teams play an integral role in a working group’s preparation for filing, roadshow and pricing. There are many instances when our knowledge of deal requirements resulted in successful deal completion.

What are some of the other areas that you can help in?

Part of being prepared is telling a complete story. Companies have focused considerable time and resources on creating prospectuses that convey the uniqueness of their business through graphics, dazzling visuals, fold-out covers, etc. The goal is to maximise the company’s valuation at IPO (and the corresponding price appreciation when the company begins to trade) by telling its story in the most effective way possible to create confidence and trust in the market. DFIN helps companies do just that.

In cases where the IPO is paused or withdrawn for whatever reason, how does DFIN’s role change?

We make all of our resources available to support a client that is withdrawing or pausing its IPO. DFIN will help with the filing requirements and work with the team to keep the document and financials up-to-date in the event the IPO window of opportunity opens again.

In addition, a withdrawn or paused IPO often pursues alternatives, and in these cases a VDR is necessary. At DFIN, our Venue VDR allows clients to collaborate with partners and stakeholders as they pursue the next step in their growth strategy – IPO, fund raising, debt issuance or acquisition.

Venue is designed for flexibility. It has advanced permissions to ensure only authorized users can view, print and update files and folders. We enforce security with document expiration and customizable watermarking. Our product allows reviewers to ask questions about content and privately provide answers with customizable Q&A workflows, user agreements, PDF Footers, and public and private notes to users.

Our rigorous security protocols have the strongest levels of encryption. Seamless integration with our industry leading AI solution eBrevia allows instant insights. We also comply with global PII standards and auto-redact client documents directly within Venue to eliminate risk of third-party exposure.

You had described DFIN as the ‘filing engine of the COVID-era’ in a recent post on LinkedIn. Could you please elaborate on that statement?

COVID has had a number of twists and turns. But once the market and our clients got their footing – around May or June – DFIN emerged as a powerful partner. The pandemic accelerated the reliance that our clients have on our services. They are looking to us – people and technology that they can trust.


The interview was conducted in partnership with DFIN. Please visit the DFIN website to know more about its technology and capital markets solutions.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.