VPCB VPC Impact Acquisition Holdings II

LESS SPAC-TACULAR The shrinking startup pool for SEA-focused SPACs Reverse listings or SPACs were all the rage in 2020 and first quarter of 2021, until a regulatory clampdown on the industry. Coupled with the blossoming Indonesia Stock Exchange, the Southeast Asia-focused SPACs are about to have a harder time hunting for targets in the region Ka Kay Lum, 30 Aug 2021 Singapore-based Kredivo Local bourses in the SEA-focused SPACs that Regulatory crackdowns is the latest company in region are also waking have been on the prowl on SPACs have also the region to pursue a up to accommodate new for a target since late- cooled the market and SPAC listing but chose economy companies that 2020 are on a tight investors are more to merge with a blank want to pursue an IPO deadline before they selective than ever about cheque firm owned by a must delist and return which companies to US investor investor money supportLESS SPAC-TACULAR The shrinking startup pool for SEA-focused SPACs Reverse listings or SPACs were all the rage in 2020 and first quarter of 2021, until a regulatory clampdown on the industry. Coupled with the blossoming Indonesia Stock Exchange, the Southeast Asia-focused SPACs are about to have a harder time hunting for targets in the region Ka Kay Lum, 30 Aug 2021 Singapore-based Kredivo Local bourses in the SEA-focused SPACs that Regulatory crackdowns is the latest company in region are also waking have been on the prowl on SPACs have also the region to pursue a up to accommodate new for a target since late- cooled the market and SPAC listing but chose economy companies that 2020 are on a tight investors are more to merge with a blank want to pursue an IPO deadline before they selective than ever about cheque firm owned by a must delist and return which companies to US investor investor money support

Read a 200 word free summary. HIDE SUMMARY On , Singapore-based FinAccel, the parent company of Indonesia-focused credit lending startup Kredivo, announced that it’s tapping the SPAC route to go public at a valuation of US$2.5 billion. Only the fourth SPAC merger in Southeast Asia, it propelled the nearly six- year-old company into unicorn territory. FinAccel expects the deal to complete by no later than the first quarter of 2022. Interestingly, the blank check firm that FinAccel chose to merge with isn’t any of the Southeast Asia-focused SPACs that have made headlines over the past year. Instead, the fintech company is merging with a SPAC owned by Victory Park Capital (VPC), a US-based alternative investment firm. In general, most companies choose to go public via SPACs because of the speed and certainty offered by these blank check firms––we’ve this earlier. A region like Southeast Asia that is full of growth companies and under-developed public markets made it a ripe hunting ground for SPACs. In an interview with The Ken, FinAccel’s head of strategy Abhijay Sethia shared that aside from the usual reasons a company would opt for a SPAC listing, he said the main driver for FinAccel was the quality of the SPAC’s sponsor (owner of the SPAC). In this case, Victory Park Capital (VPC). VPC’s relationship with FinAccel goes back over two years. It had previously provided a US$100 million credit facility to FinAccel in July 2020 and upsized it to US$200 million in June 2021. “This makes them, pro forma, the largest dollar investor in FinAccel, when you look at both the credit and equity side,” Sethia told The Ken.Read a 200 word free summary. HIDE SUMMARY On , Singapore-based FinAccel, the parent company of Indonesia-focused credit lending startup Kredivo, announced that it’s tapping the SPAC route to go public at a valuation of US$2.5 billion. Only the fourth SPAC merger in Southeast Asia, it propelled the nearly six- year-old company into unicorn territory. FinAccel expects the deal to complete by no later than the first quarter of 2022. Interestingly, the blank check firm that FinAccel chose to merge with isn’t any of the Southeast Asia-focused SPACs that have made headlines over the past year. Instead, the fintech company is merging with a SPAC owned by Victory Park Capital (VPC), a US-based alternative investment firm. In general, most companies choose to go public via SPACs because of the speed and certainty offered by these blank check firms––we’ve this earlier. A region like Southeast Asia that is full of growth companies and under-developed public markets made it a ripe hunting ground for SPACs. In an interview with The Ken, FinAccel’s head of strategy Abhijay Sethia shared that aside from the usual reasons a company would opt for a SPAC listing, he said the main driver for FinAccel was the quality of the SPAC’s sponsor (owner of the SPAC). In this case, Victory Park Capital (VPC). VPC’s relationship with FinAccel goes back over two years. It had previously provided a US$100 million credit facility to FinAccel in July 2020 and upsized it to US$200 million in June 2021. “This makes them, pro forma, the largest dollar investor in FinAccel, when you look at both the credit and equity side,” Sethia told The Ken.

2 August On , Singapore-based FinAccel, the parent company of Indonesia- focused credit lending startup Kredivo, announced that it’s tapping the SPAC route to go public at a valuation of US$2.5 billion. Only the fourth SPAC merger in Southeast Asia, it propelled the nearly six-year-old company into unicorn territory. FinAccel expects the deal to complete by no later than the first quarter of 2022. Interestingly, the blank check firm that FinAccel chose to merge with isn’t any of the Southeast Asia-focused SPACs that have made headlines over the past year. Instead, the fintech company is merging with a SPAC owned by Victory Park Capital (VPC), a US-based alternative investment firm. In general, most companies choose to go public via SPACs because of the written about speed and certainty offered by these blank check firms––we’ve this earlier. A region like Southeast Asia that is full of growth companies and under-developed public markets made it a ripe hunting ground for SPACs. In an interview with The Ken, FinAccel’s head of strategy Abhijay Sethia shared that aside from the usual reasons a company would opt for a SPAC listing, he said the main driver for FinAccel was the quality of the SPAC’s sponsor (owner of the SPAC). In this case, Victory Park Capital (VPC). VPC’s relationship with FinAccel goes back over two years. It had previously provided a US$100 million credit facility to FinAccel in July 2020 and upsized it to US$200 million in June 2021. “This makes them, pro forma, the largest dollar investor in FinAccel, when you look at both the credit and equity side,” Sethia told The Ken. In addition, the firm is investing PIPE US$30 million into the —private investment in public equity— funding of the merged entity. This means that instead of just being a lender to FinAccel, the US firm is also taking a small stake in the startup. All of this sets VPC apart from other SPAC sponsors which have no real skin in the

game, explained Sethi. FinAccel’s SPAC choice lays bare the struggles of the myriad blank cheque firms focused on Southeast Asia. Several such SPACs have spawned in the region over the past twelve months, all with the aim to take the region’s most promising tech companies public. Leading the pack was Bridgetown Holdings, owned by Hong Kong business tycoon Richard Li and US investor Peter Thiel. The arrival of Bridgetown saw a slew of other Southeast Asia-focused SPACs enter the fray, such as Hong Kong-based late-stage growth fund Provident Growth and Malaysian investment firm Catcha Group. At the same time, Li and Thiel launched a second SPAC––Bridgetown 2.game, explained Sethi. FinAccel’s SPAC choice lays bare the struggles of the myriad blank cheque firms focused on Southeast Asia. Several such SPACs have spawned in the region over the past twelve months, all with the aim to take the region’s most promising tech companies public. Leading the pack was Bridgetown Holdings, owned by Hong Kong business tycoon Richard Li and US investor Peter Thiel. The arrival of Bridgetown saw a slew of other Southeast Asia-focused SPACs enter the fray, such as Hong Kong-based late-stage growth fund Provident Growth and Malaysian investment firm Catcha Group. At the same time, Li and Thiel launched a second SPAC––Bridgetown 2.

According to regulatory filings, the duo have registered two more SPACs (Bridgetown 3 and 4) but both haven’t gone public so far. Bridgetown is probably the most prestigious blank check firm that specifically targets this region. But it’s been a year since Bridgetown went public on American stock exchange Nasdaq and it is still hunting for a target. Bridgetown 2 is faring better––it’s merging with Singapore-based property PropertyGuru Group classified business . The other SPACs, too, are without an acquisition target in hand. As they struggle to make headway, FinAccel’s choice of SPAC underlines how the region’s startups aren’t simply looking for an easy path to public markets, but rather a quality partner to make the journey with. And even as the SPACs try to woo potential targets, the pool of targets is shrinking. E- successful listing commerce platform Bukulapak’s on Indonesia’s bourses may spur other Indonesian startups to follow suit instead of looking to go public overseas through a SPAC. At the same time, the most promising startups also make for the most attractive acquisitions. Two industry sources told The Ken that Catcha Group is in advanced discussion with Malaysian used car marketplace Carsome for a deal but we couldn’t independently verify that. With startups being scooped right under their noses, SPACs have to move fast. And just in case you thought they had enough to worry about, regulators are sharpening their knives. Sense and SPAC-ability Next to Grab’s US$40 billion SPAC merger, FinAccel’s US$2.5 billion deal may seem like a drop in the ocean. But unlike Grab, FinAccel achieved profitability in the first quarter of 2021.According to regulatory filings, the duo have registered two more SPACs (Bridgetown 3 and 4) but both haven’t gone public so far. Bridgetown is probably the most prestigious blank check firm that specifically targets this region. But it’s been a year since Bridgetown went public on American stock exchange Nasdaq and it is still hunting for a target. Bridgetown 2 is faring better––it’s merging with Singapore-based property PropertyGuru Group classified business . The other SPACs, too, are without an acquisition target in hand. As they struggle to make headway, FinAccel’s choice of SPAC underlines how the region’s startups aren’t simply looking for an easy path to public markets, but rather a quality partner to make the journey with. And even as the SPACs try to woo potential targets, the pool of targets is shrinking. E- successful listing commerce platform Bukulapak’s on Indonesia’s bourses may spur other Indonesian startups to follow suit instead of looking to go public overseas through a SPAC. At the same time, the most promising startups also make for the most attractive acquisitions. Two industry sources told The Ken that Catcha Group is in advanced discussion with Malaysian used car marketplace Carsome for a deal but we couldn’t independently verify that. With startups being scooped right under their noses, SPACs have to move fast. And just in case you thought they had enough to worry about, regulators are sharpening their knives. Sense and SPAC-ability Next to Grab’s US$40 billion SPAC merger, FinAccel’s US$2.5 billion deal may seem like a drop in the ocean. But unlike Grab, FinAccel achieved profitability in the first quarter of 2021.

According to an investor presentation, the company is projected to achieve US$163 million in revenue for the ongoing year, a 122% increase from 2020. “For Kredivo (the core business of FinAccel), we’re generating significant revenues and have been profitable year-to-date in 2021, so a conventional IPO route was open for us,” said Sethia. After all, as Sethia pointed out, it’s rare to have a business––not just in Southeast Asia, but globally as well–– that’s “growing at over 100% and still generating profits”. With a traditional IPO well within reach for FinAccel, going the SPAC route was hardly an imperative. Indeed, FinAccel only opted for a SPAC because of the quality of the SPAC sponsor. Besides committing an equity investment into the company, VPC also agreed to a two-year lockup on their shares. Sethia pointed out that most sponsors have a one-year lockup. “Our debt facility with them is even longer [than the lockup period]. So across both the dollars invested and the tenure of their investment in the company, we have a partner who is aligned with us in building a very valuable business over the medium-to-long-term. It’s a combination of these factors that really drew us to the SPAC opportunity,” he added. FinAccel’s regional peers such as Grab and Sea Group are still unprofitable. However, the era of public markets punishing unprofitable companies has well and truly passed. There is still a lot of appetite in the public markets for companies that are focused on growth instead. “As long as the unit economics of the business are strong and you’re delivering the top line growth that you set out to, public investors will be patient and back your strategy” said Sethia. Short sellers incomingAccording to an investor presentation, the company is projected to achieve US$163 million in revenue for the ongoing year, a 122% increase from 2020. “For Kredivo (the core business of FinAccel), we’re generating significant revenues and have been profitable year-to-date in 2021, so a conventional IPO route was open for us,” said Sethia. After all, as Sethia pointed out, it’s rare to have a business––not just in Southeast Asia, but globally as well–– that’s “growing at over 100% and still generating profits”. With a traditional IPO well within reach for FinAccel, going the SPAC route was hardly an imperative. Indeed, FinAccel only opted for a SPAC because of the quality of the SPAC sponsor. Besides committing an equity investment into the company, VPC also agreed to a two-year lockup on their shares. Sethia pointed out that most sponsors have a one-year lockup. “Our debt facility with them is even longer [than the lockup period]. So across both the dollars invested and the tenure of their investment in the company, we have a partner who is aligned with us in building a very valuable business over the medium-to-long-term. It’s a combination of these factors that really drew us to the SPAC opportunity,” he added. FinAccel’s regional peers such as Grab and Sea Group are still unprofitable. However, the era of public markets punishing unprofitable companies has well and truly passed. There is still a lot of appetite in the public markets for companies that are focused on growth instead. “As long as the unit economics of the business are strong and you’re delivering the top line growth that you set out to, public investors will be patient and back your strategy” said Sethia. Short sellers incoming

A recent Bloomberg Businessweek story has indicated that short sellers and activist investors are turning their attention to SPACs, waiting to pounce on weak companies and bringing changes such as swapping out directors or senior management. This is good news for the existing SPACs that are still searching for an acquisition target, they need to get a deal across the finish line first. And SPACs aren’t the dream package they were touted to be when they first appeared on the Southeast Asia scene. According to industry observers that The Ken spoke to, some existing SPACs have weak institutional investor relations when it comes to raising PIPE funding. This may indicate that the SPAC sponsor doesn’t have enough influence to help its acquisition target raise additional funding––a sign of a low-quality sponsor. The lack of movement could also be due to a funding mismatch. For a SPAC deal to work, the valuation of the company relative to the size of the SPAC has to make sense, explained FinAccel’s Sethia. Take Bridgetown 1, for instance, which raised US$595 million in its IPO. Including PIPE investments, the SPAC itself will be looking to offer at least US$800 million to US$1 billion of cash proceeds to the target company. “If a company doesn’t want to dilute more than, say, 20% of its existing shareholding, then you’re looking for a company that is worth at least US$5 billion today to absorb all that capital. How many such companies are there in Southeast Asia?” Sethia asks. And then there’s competition from local stock exchanges, such as theA recent Bloomberg Businessweek story has indicated that short sellers and activist investors are turning their attention to SPACs, waiting to pounce on weak companies and bringing changes such as swapping out directors or senior management. This is good news for the existing SPACs that are still searching for an acquisition target, they need to get a deal across the finish line first. And SPACs aren’t the dream package they were touted to be when they first appeared on the Southeast Asia scene. According to industry observers that The Ken spoke to, some existing SPACs have weak institutional investor relations when it comes to raising PIPE funding. This may indicate that the SPAC sponsor doesn’t have enough influence to help its acquisition target raise additional funding––a sign of a low-quality sponsor. The lack of movement could also be due to a funding mismatch. For a SPAC deal to work, the valuation of the company relative to the size of the SPAC has to make sense, explained FinAccel’s Sethia. Take Bridgetown 1, for instance, which raised US$595 million in its IPO. Including PIPE investments, the SPAC itself will be looking to offer at least US$800 million to US$1 billion of cash proceeds to the target company. “If a company doesn’t want to dilute more than, say, 20% of its existing shareholding, then you’re looking for a company that is worth at least US$5 billion today to absorb all that capital. How many such companies are there in Southeast Asia?” Sethia asks. And then there’s competition from local stock exchanges, such as the

Indonesia Stock Exchange (IDX). The Indonesian tax structure makes it more compelling for companies to list locally before they set their sights on an overseas listing. This case was only helped when the listing of Bukalapak, the first tech unicorn to go down the IDX path, was a roaring success. The company raised US$1.5 billion from the IPO. This may encourage more tech firms in Indonesia to follow suit. And if Indonesia is out of reach for most SPAC sponsors, the pool of target companies gets a lot smaller, considering the archipelago is home to several unicorns and late-stage companies. Less forward-looking, more realistic-looking The biggest hurdle of all, though, is the regulatory crackdown by the capital markets watchdog, the US Securities and Exchange Commission (SEC). With the SEC breathing down the necks of these SPAC owners and their target companies, even the most promising yet unprofitable companies will have to be cautious when it comes to presenting themselves to investors. According to data compilation site SPACResearch.com, there are 583 active SPACs with a total of US$174.5 billion raised for investment into the companies that they merge with.Indonesia Stock Exchange (IDX). The Indonesian tax structure makes it more compelling for companies to list locally before they set their sights on an overseas listing. This case was only helped when the listing of Bukalapak, the first tech unicorn to go down the IDX path, was a roaring success. The company raised US$1.5 billion from the IPO. This may encourage more tech firms in Indonesia to follow suit. And if Indonesia is out of reach for most SPAC sponsors, the pool of target companies gets a lot smaller, considering the archipelago is home to several unicorns and late-stage companies. Less forward-looking, more realistic-looking The biggest hurdle of all, though, is the regulatory crackdown by the capital markets watchdog, the US Securities and Exchange Commission (SEC). With the SEC breathing down the necks of these SPAC owners and their target companies, even the most promising yet unprofitable companies will have to be cautious when it comes to presenting themselves to investors. According to data compilation site SPACResearch.com, there are 583 active SPACs with a total of US$174.5 billion raised for investment into the companies that they merge with.

SEC’s crackdown But that SPAC mania has cooled since the on the accounting rules of blank cheque companies in April which classifies warrants as liabilities and not equity instruments. Warrants are a deal- sweetener, offering early investors the opportunity to purchase additional shares in the future at a fixed price (usually a premium). The regulator has also heightened its scrutiny of SPAC transactions, first sanction including making its on a SPAC and its acquisition target for misleading investors. The SEC is essentially scrutinising the accuracy of all disclosures filed by SPACs and their companies. A critical distinction between a SPAC listing and a traditional IPO is the ability to include forward-looking financial projections in a proxy or registration statement rather than historical financial results. This is what makes the SPAC route attractive to unprofitable companies.

This is because technically, it’s a merger and not an IPO. Hence, SPAC listings are also known as “reverse listings”. And for the companies, forward-looking statements enable them to divert investor attention from their poor financials (if any) to the rosy (and perhaps profitable) future that they envision. But in the eyes of regulators, this means that investors are at risk of being severely misled. Some say that the regulatory crackdown has also affected the biggest blank cheque merger in history––Grab’s US$40 billion SPAC listing. In April, the Singapore-based company said it is merging with Altimeter Growth Corp, a blank cheque company owned by US investment firm Altimeter Capital to pursue a listing in the US. The transaction which was supposed to have been delayed completed by July-August, is to the fourth quarter of 2021. A senior executive familiar with the industry argued otherwise. They said that the company required more time to be more thorough with its auditing process to avoid any future complications. The executive requested anonymity as they are not authorised to speak with the media. In an interview with Bloomberg TV in June, Grab co-founder Anthony Tan declined to confirm whether there would be any major restatements of its financials following the audit. Same same but different? Under existing accounting rules, there isn't a clear answer to how companies should treat consumer incentives like discounts. As a result, similar companies could have different revenues because they define their customers differently.This is because technically, it’s a merger and not an IPO. Hence, SPAC listings are also known as “reverse listings”. And for the companies, forward-looking statements enable them to divert investor attention from their poor financials (if any) to the rosy (and perhaps profitable) future that they envision. But in the eyes of regulators, this means that investors are at risk of being severely misled. Some say that the regulatory crackdown has also affected the biggest blank cheque merger in history––Grab’s US$40 billion SPAC listing. In April, the Singapore-based company said it is merging with Altimeter Growth Corp, a blank cheque company owned by US investment firm Altimeter Capital to pursue a listing in the US. The transaction which was supposed to have been delayed completed by July-August, is to the fourth quarter of 2021. A senior executive familiar with the industry argued otherwise. They said that the company required more time to be more thorough with its auditing process to avoid any future complications. The executive requested anonymity as they are not authorised to speak with the media. In an interview with Bloomberg TV in June, Grab co-founder Anthony Tan declined to confirm whether there would be any major restatements of its financials following the audit. Same same but different? Under existing accounting rules, there isn't a clear answer to how companies should treat consumer incentives like discounts. As a result, similar companies could have different revenues because they define their customers differently.

release The of its first quarter results for 2021 in August offered a glimpse into what changed. Grab noted some updates on revenue presentation after a pre-clearance consultation or voluntary review with the SEC. The company initially considered its drivers and merchant partners its customers, which led to the company treating discounts as marketing expenses. But post accounting purposes consultation, for , consumers who order food, groceries or rides are also considered Grab’s customers. This decision meant less revenue for Grab, although it said this doesn’t impact the company’s cash flow or the fundamentals of its balance sheet. But all these factors could make other unprofitable companies that want to pursue a SPAC listing to think twice as the supposedly easier path to go public isn’t that easy anymore. And if you’re a company that operates in multiple markets with multiple lines of business, that adds layers of complexity to the auditing process, noted a senior executive of a regional startup. The regulatory crackdown has also dampened investor sentiments, especially among PIPE investors, who usually comprise institutional and accredited investors like sovereign wealth funds, pension funds, high-net-worth individuals, family offices, etc. In other words, unless the target company has a solid business, it will be more challenging for SPACs to raise PIPE investments for their target companies. A lot has changed in the SPAC industry in the last six months, said Sethia. PIPE amounts were larger and rounds closed faster when the SPAC market boomed in late 2020. But there has been more regulatory scrutiny and investors are also being more selective in which SPACs they want to back. “Ultimately, this is a good thing for the long-term health of the SPAC market,” he added.release The of its first quarter results for 2021 in August offered a glimpse into what changed. Grab noted some updates on revenue presentation after a pre-clearance consultation or voluntary review with the SEC. The company initially considered its drivers and merchant partners its customers, which led to the company treating discounts as marketing expenses. But post accounting purposes consultation, for , consumers who order food, groceries or rides are also considered Grab’s customers. This decision meant less revenue for Grab, although it said this doesn’t impact the company’s cash flow or the fundamentals of its balance sheet. But all these factors could make other unprofitable companies that want to pursue a SPAC listing to think twice as the supposedly easier path to go public isn’t that easy anymore. And if you’re a company that operates in multiple markets with multiple lines of business, that adds layers of complexity to the auditing process, noted a senior executive of a regional startup. The regulatory crackdown has also dampened investor sentiments, especially among PIPE investors, who usually comprise institutional and accredited investors like sovereign wealth funds, pension funds, high-net-worth individuals, family offices, etc. In other words, unless the target company has a solid business, it will be more challenging for SPACs to raise PIPE investments for their target companies. A lot has changed in the SPAC industry in the last six months, said Sethia. PIPE amounts were larger and rounds closed faster when the SPAC market boomed in late 2020. But there has been more regulatory scrutiny and investors are also being more selective in which SPACs they want to back. “Ultimately, this is a good thing for the long-term health of the SPAC market,” he added.

A shrinking hunting ground? In Southeast Asia, four SPAC deals have been announced so far, but none of the companies have completed the transactions. This includes the first to jump on the SPAC-wagon––Indonesia’s tech firm Asia Vision Network, which owns OTT company Vision+ and broadband agreed to provider MNC Play. In March, it merge with the first Southeast Asia-focused SPAC––Malacca Straits Acquisition––to take the company public at an enterprise value of US$573 million. Traveloka Indonesia’s travel startup , meanwhile, is reportedly in advanced discussions with Bridgetown 1 since early April. However, nothing has beenA shrinking hunting ground? In Southeast Asia, four SPAC deals have been announced so far, but none of the companies have completed the transactions. This includes the first to jump on the SPAC-wagon––Indonesia’s tech firm Asia Vision Network, which owns OTT company Vision+ and broadband agreed to provider MNC Play. In March, it merge with the first Southeast Asia-focused SPAC––Malacca Straits Acquisition––to take the company public at an enterprise value of US$573 million. Traveloka Indonesia’s travel startup , meanwhile, is reportedly in advanced discussions with Bridgetown 1 since early April. However, nothing has been

announced so far. A senior investment executive told The Ken that Bridgetown has extended the exclusivity period of discussion with Traveloka by another month. Perhaps an indication that the deal is in the final stages of discussion, they said, requesting anonymity as they don’t want to be seen discussing these companies publicly. During the exclusivity period, the target company isn’t allowed to enter discussion with other SPACs. But as more attractive companies in the region are snapped up, the remaining SPACs will find themselves racing against time to hunt for a target. “First-time SPAC sponsors think they can take it casual with the upto 24 months given for them to find a deal. But if you’re starting a SPAC, you better have a deal or two lined up and get the ball rolling in the first six months. The rest of the 18 months can be the buffer for you to close the transaction,” said a second senior investment executive. They requested anonymity as they don’t want to be seen discussing the topic publicly. This is because no one can tell what could go wrong in the de-SPAC process. Two months after a SPAC merger is announced, investors of the blank cheque company will vote on the deal. Investors that vote against the deal will then withdraw their money. This will reduce the pot of money that was raised when the SPAC was listed. And if there isn’t sufficient PIPE investment to make up for the shortfall of funds, it will be difficult for the merger to complete, explained the executive. There’s a lot of execution risks to get a SPAC deal across the finishing line, said the executive. There are also instances where after the SPAC deal is done and dusted, before the shares start trading, investment bankers would bring target companies on a “done deal roadshow” to forge relationships with fund managers and to help them understand the business better.announced so far. A senior investment executive told The Ken that Bridgetown has extended the exclusivity period of discussion with Traveloka by another month. Perhaps an indication that the deal is in the final stages of discussion, they said, requesting anonymity as they don’t want to be seen discussing these companies publicly. During the exclusivity period, the target company isn’t allowed to enter discussion with other SPACs. But as more attractive companies in the region are snapped up, the remaining SPACs will find themselves racing against time to hunt for a target. “First-time SPAC sponsors think they can take it casual with the upto 24 months given for them to find a deal. But if you’re starting a SPAC, you better have a deal or two lined up and get the ball rolling in the first six months. The rest of the 18 months can be the buffer for you to close the transaction,” said a second senior investment executive. They requested anonymity as they don’t want to be seen discussing the topic publicly. This is because no one can tell what could go wrong in the de-SPAC process. Two months after a SPAC merger is announced, investors of the blank cheque company will vote on the deal. Investors that vote against the deal will then withdraw their money. This will reduce the pot of money that was raised when the SPAC was listed. And if there isn’t sufficient PIPE investment to make up for the shortfall of funds, it will be difficult for the merger to complete, explained the executive. There’s a lot of execution risks to get a SPAC deal across the finishing line, said the executive. There are also instances where after the SPAC deal is done and dusted, before the shares start trading, investment bankers would bring target companies on a “done deal roadshow” to forge relationships with fund managers and to help them understand the business better.

“This is so that when you start trading, they won’t sell off your shares so quickly and cause the share price to plummet. Is a SPAC listing starting to sound like a conventional IPO? Because it kind of is, but the major difference here is that you can present forward-looking statements to investors,” added the executive. All of this makes it clear why FinAccel’s focus was on the quality of sponsor —if the SPAC sponsor is of high quality, half the battle has been won. “At the end of the day, it’s a US investor base and if you’re not known to them, then you will probably have to do those roadshows post-transaction,” said the first executive. The rise of BNPL In FinAccel’s case, its BNLP (buy now, pay later) business model is known to US investors which would make its journey towards the US capital markets relatively easier, added the executive. It also helps that a major deal recently took place in the same space, where US payment giant Square acquired Australia-based AfterPay, a BNPL company for US$29 billion. With all these complications, the outlook for SPACs focused on Southeast Asia is anything but rosy. Many will have a hard time finding a target, and some may even end up getting delisted. But despite all that, investors told The Ken that blank cheque firms are here to stay because it’s an alternative option for companies and their shareholders to achieve meaningful exits. Harold Ong, a partner at alternative asset manager Indies Capital Partners, said the SPAC boom, coupled with local bourses supporting new economy listings, have transformed the flexibility for late-stage companies in pursuing

liquidity. The firm predicts that Southeast Asia will have about 35 unicorns in the next few years, which will present a real opportunity for the public markets. Ultimately, a SPAC is a means to an end for companies like FinAccel, said Sethia. “It’s an efficient way of accessing capital and getting listed. After that we’re going to live and die by the numbers that we produce on a quarterly basis. Just like any other public company.” That said, approach with caution. Image Credit: Phil Hearing/Unsplashliquidity. The firm predicts that Southeast Asia will have about 35 unicorns in the next few years, which will present a real opportunity for the public markets. Ultimately, a SPAC is a means to an end for companies like FinAccel, said Sethia. “It’s an efficient way of accessing capital and getting listed. After that we’re going to live and die by the numbers that we produce on a quarterly basis. Just like any other public company.” That said, approach with caution. Image Credit: Phil Hearing/Unsplash

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