PYMNTS SPAC Tracker: Market Cools; SEC On The Lookout For More Info


The PYMNTS SPAC/IPO Tracker shows that though some observers have flagged the red-hot listing pace as ripe for a slowdown — CNBC reports that April has seen roughly 10 SPAC deals, where March had about 109 deals) — software companies and firms that stake their claims as digital disruptors are still garnering investor favor.

The Tracker shows that to date, payment-related IPO plans stood at 12 listings, and banking stood at 17.

As reported this week, software firm UiPath, which uses digital transformation technology to connect the disparate front- and back-end office functions, opened its first trading day at $56 and closed at $69. The company increased its deal size ahead of the offering by 28 percent (we contend it was a sign of demand and perhaps even confidence ahead of the offering). At a recent $76 a share, the trend has been upward even in the midst of a rocky trading week.

Elsewhere, as reported by The Wall Street Journal, in the PropTech space, Inc., which sells smart home technology systems to apartment-building owners and developers, signaled its plan to go public through a merger with a SPAC, Fifth Wall Acquisition Corp. The valuation stands at about $2.2 billion, according to reports. The SmartRent technologies allow landlords to monitor and operate utilities and other functions through devices.

And in a sign of international activity, Infobird Co., a Software-as-a-Service firm based in China, listed its shares on the tech-heavy NASDAQ this week. Bloomberg reported that the listing, starting at $4, soared to more than $11. As of this writing, the shares were most recently trading hands at $4.40.

SEC on the Lookout

In an interview with PYMNTS, Larry Harris, the Fred V. Keenan chair in finance at the USC Marshall School of Business, said that premium valuations may be in the offing, signaling at least some risk for investors. He also noted that the Securities and Exchange Commission will likely continue to prod investors to do their due diligence. “We have lots of stacks out there that are based only on the reputation of the managers,” he noted.

Those managers are under pressure to complete deals – if they don’t, Harris said, they’ll have to give investors their money back. That may drive valuations higher as SPACs compete for the same pool of investments.

Despite the fact that target companies may be developing innovative technologies, “good firms or great firms are not necessarily good investments if they are overpriced,” Harris noted. Among the key concern, he said, is that the money that goes into SPACs winds up going out – or that capital is supporting new firms that may not have the best ideas.

Asked by PYMNTS about the SEC’s recent signals that there will be more focus on disclosures going forward, Harris said that the regulators may be “aware that there could be a collapse in the future. And people will ask why they didn’t do more … it’s a way of publicizing the fact that people should be paying attention to these documents.” If the SPAC phenomenon is a boom, it’ll bust – but, as Harris noted, “the concern is that we don’t want people to lose out because of their own ignorance.”

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