The SPAC fever appears to have finally hit Southeast Asia but the jury is still out on whether these acquisition vehicles will be a runaway success for investors.
“We’ve seen plenty of SPACs but not enough successful de-SPACs,” Vickers Venture Partners founder and chairman Finian Tan told DealStreetAsia in an exclusive interview.
The Singapore-based deep tech venture capitalist was one of the first in this region to publicly announce SPAC plans. In December 2020, it filed with the US Securities and Exchange Commission to raise $100 million in an IPO on Nasdaq for its blank cheque firm Vickers Vantage. On Thursday, Vickers Vantage announced the pricing of its $120-million offering, comprising 12,000,000 units at $10 per unit.
Several other SE Asia-focused SPACs have joined the fray since.
Other region-focused SPACs include Aspirational Consumer Lifestyle’s $225-million vehicle led by Ravi Thakran, Provident Acquisition’s $200-million SPAC by Provident Growth, and Tiga Acquisition’s $200-million SPAC led by Raymond Zage III.
These join a global pool of SPAC players that has been rapidly expanding in recent months. 2020 was a peak year with a total of 248 SPAC IPOs transacted globally raising $83 billion in 2020, according to IPO Insider.
|SPAC name||Sponsor/s||Sponsor members||SPAC size|
|SVF Investment Corp||SoftBank Vision Fund||SoftBank Vision Fund||$500-600m|
|Bridgetown Holdings||Bridgetown LLC||Richard Li's Pacific Century Group & Peter Thiel's Thiel Capital)||$595m|
|Aspirational Consumer Lifestyle||Aspirational Consumer Lifestyle Sponsor LLC||Ex-L Catterton execs, Ravi Thakran, J. Michael Chu and Scott A. Dahnk||$225m|
|Provident Acquisition||Provident Acquisition Holdings||Provident Growth and Provident Capital||$200m|
|Tiga Acquisition||Tiga Sponsor LLC||Raymond Zage III and Ashish Gupta||$200m|
|Vickers Vantage||Vickers Ventures Partners Fund VI||Vickers Ventures Partners Fund VI||$100m|
SPACs, however, continue to face a perception battle, having been long regarded as “bottom-feeders” capturing second-grade companies in the US public market.
SPACs originating from Southeast Asia haven’t left a lasting impression either.
In December 2018, Singapore-based luxury online marketplace Reebonz listed on the Nasdaq through a SPAC merger by Draper Oakwood Technology Acquisition (DOTA) led by Draper Oakwood Investments. Its shares struggled to stay afloat, eventually forcing the company to delist last July, after failing to meet the minimum share price requirement of $1 for more than 30 days.
With seasoned M&A executives acting as SPAC sponsors this time around, the negative image may have begun to fade. Hardcore proponents for SPACs include Social Capital’s Chamath Palihapitiya and Pershing Square Capital Management’s Bill Ackman who have also emerged with multi-billion dollar SPAC vehicles each.
SE Asia-focused investors are also warming up to the SPAC option.
SPAC sponsors like Provident and Tiga Acquisition are drawn to speedier liquidity offered by the SPAC route compared to a traditional IPO, which can be both lengthy and costly. Many are banking on the recent spurt of the region’s “soonicorns” or venture-backed firms nearing the hallowed $1 billion valuation mark, resulting in investors getting busy with the groundwork for eventual portfolio exits.
“We first started thinking about doing a SPAC eight years ago, but it wasn’t the right time then. SPAC terms have since been changed and are now more balanced,” said Finian Tan.
Vickers Ventures Fund VI will act as the SPAC’s sponsor and will have 24 months to successfully identify and complete the merger. Tan further explained that even though venture capitalists primarily operate in private rather than public markets, the skill-sets required from a VC and SPAC managers are still fundamentally the same.
“One basically needs to do three things well. First, to have a good deal flow. Second, to have a good filter. Third, to help the company grow. Those are the same three things required of a good venture capitalist,” explained Tan.
A number of Vickers’s portfolio companies are ripe for exit in the coming 1-2 years as well. Public market conditions prevailing, Tan is anticipating at least one IPO on the Shanghai Star Board in 2021.
Its best performing fund so far is it’s $81.1-million fourth fund from the 2012 vintage with a projected net IRR of 34-37%, according to its official website. Some of its portfolio firms include Samumed, Emergex Vaccines and AWAK Technologies.