Is this China’s Answer to SPACs?

The Daily Dish (09/14/21)

China is Introducing an Alternative Exchange to Target Innovation Based SMEs 

As China steps up its regulatory efforts on overseas listings of homegrown technology companies, a new exchange planned could present itself as a potential alternative. The Beijing Stock Exchange is expected to provide access to capital for small and medium enterprises, which is part of the country’s top brass to boost domestic capital markets while reducing debt levels.

Officials hope that the new alternative exchange could ultimately become the preferred destination for IPOs of promising, early-stage, tech firms and allow Chinese investors to benefit from the development of home-grown firms.

Chinese Regulators have stated previously that SPACs and other non-traditional listing models like direct listings, pose a threat to traditional IPOs and create issues for regulators. The country has also begun its crackdown on the country’s tech sector that is listed overseas, with officials scrutinising the listings of companies that hold the personal data of 1 million or more Chinese people.

As a result, the appetite for SPACs to target Chinese companies remains low, especially under the threat of regulatory action. Beijing’s alternative exchange may help further tighten the government’s control of tech firms while helping infuse capital for cash-strapped companies.

Taiwanese Startup Gogoro in SPAC Merger Discussions 

Gogoro, a company that specialises in battery-swopping technology, is currently in talks to go public through a SPAC merger with Poema Global Holdings, with the combined company being valued at around $1 billion. The terms are not yet finalised, with the possibility that the talks could fall through.

The company announced last month that it had saved 300 million kilograms of carbon dioxide, which is equivalent to what more than 30 million trees absorb in a year.

Executives of the company tout that its innovative technology will reduce consumer anxiety about battery life in EVs while increasing range and reducing usage costs.

The company also announced recently that its network of monthly subscribers crossed 400,000 users, while it had completed more than 200 million battery swops since inception. In a positive development for the company, it recently struct strategic partnerships in India and China.

MoneyLion Introduces Cryptocurrency Investing Ahead of SPAC Completion 

Banking and investing app MoneyLion has just introduced crypto trading into its financial services app, a week before it goes public through a SPAC merger with Fusion Acquisition Corp.

The company is initially introducing buying and selling for Bitcoin and Ethereum, with the possibility to explore different yield products, crypto payment applications and NFT marketplaces in the future.

The company won’t charge customers for transactions but will make money through the spread when they convert their cryptocurrency to dollars. MoneyLion has 2.2 million customers as of August and offers banking, investing and credit services on the app.

Reddit Reads

ACG-GRAB Deal on Track for Q4, Company Cuts Full-Year Outlook 

Singapore based Grab is making progress on its merger with Altimeter Growth Corp and expects to complete its $40 billion SPAC merger by Q4. The company also reduced net sales outlook and gross march value by 10%, citing concerns about a resurgence in the pandemic.

High Redemptions are Killing SPACs 

After the SEC made SPACs reclassify warrants as liabilities, the time taken for mergers has significantly increased. Similarly, high redemptions have resulted in much lower cash than anticipated, ensuring that cash raised is less than/equivalent to that of an IPO. Thus, there may currently be a systematic issue for SPACs attracting target companies over the next few months.

The Headlines


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