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Deal Pipeline For Slumping IPOs And SPACs Suggests Rebound May Be Coming

Deal Pipeline For Slumping IPOs And SPACs Suggests Rebound May Be Coming

May 21, 2021 at 06:11PM
by PYMNTS

The PYMNTS IPO/SPAC Tracker finds relatively muted announcements of public listings in the payments/financial services space, with a bit more than two dozen bank listings and a bit more than a dozen payment firm listings year to date.

But drilling down a bit, there has been a smattering of activity through the last few days. In one example, Macondray Capital Acquisition I filed for a $275 million IPO. The blank-check firm will target software, data and technology firms.

Separately, the electronic billing platform Paymentus said in its own SEC filing that it is seeking a valuation of up to $2.4 billion in its U.S. initial public offering (IPO) as it looks to raise about $210 million. Paymentus saw its revenues increase by 32 percent to reach $92.2 million in the first quarter of 2021, on the heels of a surge in online payments.

In a sign of the growing popularity of platform offerings, China-based E-Home Household Services Holdings, which offers housekeeping and home appliance services through its site and via WeChat, saw its shares shoot up by more than 1,100 percent on its first day of trading last week, to $54, before backing off to a recent $29.77.

By any measure, the listing pace, not even halfway through the year, shows that SPACs still have had a tailwind, as SPAC Research estimates that the total number of IPOs stands at 325, up from 248 in all of the previous year.

Poised for a Rebound?

In an email Q&A with PYMNTS, Mitchell Presser, partner and co-chair of Morrison & Foerster’s global corporate department, took note of the continued appeal of SPACs, telling PYMNTS that because the SPAC is already publicly traded, the process of the de-SPAC merger – and therefore the effective public listing of the target company – “is shortened from what is usually at least a six- to seven-month process to a period closer to three or four months.”

Separately, Justin Salon, a corporate partner at Morrison & Foerster, weighed in with PYMNTS on the regulatory climate: Recent SEC bulletins are meant to “remind market participants that SPAC IPOs and de-SPAC transactions are subject to existing federal securities laws that must be considered carefully in the context of these transactions.” He stated that the SEC statements, from the end of March into April, “did not materially affect the SPAC market, but did cause sponsors, lawyers and bankers to think more carefully about their disclosures to ensure clarity and completeness.”

As Salon explained, “the market for SPAC IPOs still isn’t very constructive at the moment, and very few deals are getting done. Those that are getting done are relying on non-traditional SPAC investors, changing the structure of their deals or downsizing their deals at pricing … while we don’t expect the same level of activity as we saw in the first quarter of 2021, we are optimistic that the second half of the year will see a more sustainable level of deal activity in the SPAC space.”

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