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Forbes has reportedly pulled the plug on its SPAC IPO after conducting market reevaluations. An official announcement is expected soon.
Forbes will not be going forward with its SPAC initial public offering (IPO) plans, according to fresh reports. The New York Times reported on Tuesday that the media group’s decision to abandon its SPAC listing was due to waning enthusiasm for blank-cheque vehicles. The Times cited two inside sources who stated that Forbes arrived at this SPAC ditch “amid cooling investor appetite for the once-popular financial instrument”. In addition, increased scrutiny of SPACs by the Securities and Exchange Commission (SEC) is also a major contributing factor to decreasing interest. This is because several companies that attempted to brace the SEC pressure and go public via SPAC mergers have seen their stocks plunge. One inside source stated that Forbes might officially announce SPAC IPO cancellation this week.
Recap of Forbes’ Scrapped IPO Listing
Forbes earlier intended to go public via a blank-check company in Hong Kong but stopped when the market dwindled. In addition to taking the media company public, the deal would give Forbes a $300 million valuation. The American business magazine, which chronicles the lifestyle of the wealthy and powerful, first announced its SPAC plans last August. Part of this plan entailed Forbes merging with the Hong Kong-based Magnum Opus Acquisition, and benefiting from a $200 million investment from Binance. It currently remains unclear how or if Binance will seek to invest in Forbes through other means.
Forbes SPAC IPO deal outlay also included a $145 million cash injection from the L2 Capital-backed Magnum Opus Acquisition, a SPAC founded by a former portfolio manager at Steve Cohen’s hedge fund Point72 Asset Management.
Hong Kong-based investor group Integrated Whale Media had purchased a 51% controlling interest in Forbes back in July 2014. This majority stake was acquired from the Forbes family, which earlier bought out venture capital firm Elevation Partners. The value of Integrated Whale Media’s purchase was a lofty $475 million. However, the leading investment services provider has repeatedly made attempts in the ensuing period to exit its investment.
SPACs (Special Purpose Acquisition Companies), are blank-check publicly-traded firms established with the sole purpose of taking a private firm public. These companies achieve this by raising funds from participating investors and pooling the funds for the desired goal.
Investor enthusiasm around blank-check companies was at its peak early last year but faced a downturn. This came about after several SPACs defaulted on their promises to investors. After several SPACs failed their investors, the SEC stepped in to increase scrutiny and avert similar future occurrences.
Despite the stringent requirements, some SPACs are still seeking media deals. For instance, Group Nine Media executives started their own blank-check company to strengthen the digital media space. Group Nine Media is a publishing company acquired by Vox Media last year.