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SoftBank SPAC IPO will be overseen by SoftBank Investment Advisers which also runs the Vision Fund. Besides, Goldman Sachs Group and Citigroup will underwrite the deal.
SoftBank Group Corp (OTC: SFTBF) is preparing to file for an Initial Public Offering (IPO) of a special-purpose acquisition company (SPAC) called Bridgetown Holdings (NASDAQ: BTWNU). The target of the Softbank SPAC IPO makes up at least $500.
Vision Fund’s CEO Rajeev Misra first announced plans for the SPAC back in October. Until now, no further information about the initiative appeared. The venture will combine the Vision Fund’s expertise in tech startups with SoftBank’s relatively new emphasis on public stock trading. In addition, as reported by Axios, SoftBank is working on at least two additional SPACs.
What Is SPAC?
SPACs stand for special purpose acquisition companies or “blank check” shell corporations designed to take companies public without going through the traditional IPO process. In general, they are formed by investors or sponsors who have expertise in a particular industry or business sector. At the time of their IPOs, SPACs have no existing business operations. That is why investors put money into a stock without knowing which company they will back. The SPAC manager then chooses a company and pursues a merger that lets the startup go public and inherit the capital raised.
The money SPACs raise in an IPO is placed in an interest-bearing trust account. These funds are then used only to complete an acquisition. To complete a deal, SPACs have two years to complete. If the transaction gets approval, the SPAC continues to conduct business. Otherwise, it returns funds to investors and closes down. In this case, each share is will get back a proportionate amount of the IPO proceeds previously deposited.
First SPACs appeared in the US back in the 1990s. Lately, they have become quite popular worldwide. SPAC IPOs have gained traction in Canada, UK, Netherlands, New Zealand, South Korea to name a few countries. By August 2020, more than 50 SPACs have been formed in the US. They have raised about $21.5 billion in total. The benefit of a SPAC IPO that in comparison with a typical private equity deal, selling to a SPAC can add up to 20% to the sale price. Further, they require fewer expenses from the founders. Besides, acquisition by a SPAC can provide business owners with a faster IPO process under the guidance of an experienced partner.