From the following big thing to sad mistake, the global SPAC market has had a few great years. So-called blank check companies, which list a skeleton company for the purpose of later merging with a private entity, can provide a fast track to global stock markets. They can also, as we’ve learned in recent quarters, burn shareholder wealth and potentially expose retail investors to undue risk.
The 2020-2021 period of excessive investor exuberance sparked a spate of SPAC listings and, later, combinations. The result of the wave of deals, centered in the United States, has largely been a series of smoking craters in the public markets. This is not news, not at all. It’s been a while since australiabusinessblog.com declared the SPAC wave a failure, at least in terms of taking a useful chunk of the unicorn backlog; the number of startups worth $1 billion or more that must find an exit is growing every month, a trend that SPACs have been unable to stop.
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But while SPAC might as well be a bad word in the United States today, there’s blank-check activity elsewhere worthy of our attention. Notably, this week’s SPAC combo from Deezer, a European music streaming service that competes with Spotify. Taking the SPAC route as late as 2022 may seem counter-trend, but there are some regulatory and choice-based differences in the European public markets that left us with a slightly tastier taste in our mouths regarding the Deezer. deal. (Our first reading of the deal can be found here.)
Still, the company lost ground during its early trading sessions, meaning some elements of SPAC deals appear similar on both sides of the Atlantic. Let’s talk about the final results of the Deezer deal, how quickly the IPO market has changed more broadly, and then enter the European SPAC market in the wake of Deezer’s demonstrative debut.
The Deezer SPAC deal
According to to the companyAfter completing its merger with the publicly traded I2PO, Deezer raised €143 million in new capital in its SPAC deal. That figure includes funds provided by the SPAC partner and private money flowing into a public company (PIPE) from previous Deezer backers.
According to the company, the new capital will be used to “finance the next phase of growth”.
The amount raised by Deezer may seem like a win; after all, every nine-figure round in 2022 is a win. But it’s lower than it could have been, with Deezer noting in his SPAC press release: that his IPO partner had “held €275 million … in a special deposit account” along with a PIPE deal worth “up to €119 million”. So how did Deezer get to just $143 million? More or less redemptions or funds taken out of the deal by “Dissenting Market Shareholders”, to quote the companies in question.
Still, capital raised, shares floated. That’s a win, yes? Something. After trading at just under €10 per share prior to the combination, Deezer’s shares fell to €6 per share at the time of writing, indicating that while the transaction is closing, there is still work to be done for it. music streaming company to convince investors to tap their feet along with its beat.
A global delay sinks all ships