PSPC CEO: Blank Checklists Help FinTechs
The continued and heady pace of “blank check” companies filing IPOs shows no signs of slowing down. And while some observers may point out what appears to be an unsustainable pace (and soaring initial public offering prices), others note that listing through Special Purpose Acquisition Companies (SPAC) has strategic value. for businesses that are typically targets in the process.
Amanda abrams, CEO of FinTech Masala, CEO of FTAC Acquisition Corp. and managing director of Cohen and Co., which has launched several SPACs, told PYMNTS that SPACs could help fast-growing small businesses get the capital they need to thrive. She said that there have been, and still are, a number of FinTechs launched in recent years – some of them dating back to the early 2000s – that are growing rapidly and are at this point. which she called “an inflection point” where an infusion of capital could take them to the next level of their lifecycle.
But, she added, those same companies might not be able, generally, to access public markets at the valuations they would like, as valuations linked to traditional IPO conduits might be linked to. historical figures.
On the other hand, SPAC evaluations tend to focus on forward looking projections. Additionally, the PSPC process is relatively accelerated, where these fast growing companies can access capital faster – a virtuous cycle that helps bring innovations to end users.
For FinTechs who are considering exit strategies down the line, she added, going public through PSPC gives them validation and eventual ‘exit’ which may represent offers that are significant bonuses over. to offers received even a year or two ago.
Cohen, she noted, has completed a number of payments-focused or payment-related business acquisitions through PSPCs dating back to 2015 (through PSPCs such as FTAC Athena Acquisition, FTC Hera Acquisition and others).
When asked what attributes relate to attractive acquisition candidates, she said “a great business model with a great leadership team that has the ability to execute a plan is what we’re looking for – more than a specific space in the FinTech field. Cohen, she added, sees double-digit revenue growth, recurring revenue with a loyal customer base in the business model. Funds raised through the SPAC channel, she said , can also give these high growth companies “access to a” public currency where they can execute targeted acquisitions that will truly fuel growth “to accelerate their business models.
Looking at the SPAC space in general, Abrams pointed out the enrollment boom in recent months. As a result, there have been more “target companies” actively seeking agreements with SPACS.
“These are companies that may not even have been aware of this alternative or had viewed it from the same perspective” before SPACS had the visibility they now have.
There will be a possible pullback at some point when the market experiences a certain level of saturation and when the SPACs discover that they cannot find desirable targets or face trades at less than ideal valuations.
“But I don’t think it’s going to be the end of PSPC,” she said, stating, “I don’t think it’s a fad or a trend. PSPC has a real place in the market. They deliver. an alternative to access to public markets and it is an alternative to an IPO or direct listing. “
The intoxicating rhythm of registrations continues
The PYMNTS SPAC / IPO Tracker finds that in the third week of March, announcements related to banking / financial services and commerce prevailed. As evidenced by the graph below, during the month (which is not yet over) financial services announcements totaled around half a dozen.
Among these announcements, Fintech SPAC Newcourt Acquisition filed for a $ 200 million IPO focus on FinTechs with exposure to emerging markets. Elsewhere, 1Sharpe Acquisition, a blank check company formed by targeting 1Sharpe Capital, will target PropTech and FinTech companies. The company earlier filed this month to raise $ 225 million in an initial public offering.
And in the InsurTech space, real estate tech startup Doma, formerly known as Title of States, announced that it would go public through a merger with SPAC Capitol Investment Corp. V as part of an agreement valued at $ 3 billion, including debt, as reported by TechCrunch.
And although there is no official announcement yet, as relayed here last week, Chime is in talks with investment banks about a new IPO, which could value the startup at more than $ 30 billion.