The Daily Dish (07/13/21)
The Securities and Exchange commission is stepping up its enquiry into the SPAC Frenzy and is focusing on potential conflicts of interest created when banks act as underwriters and advisers on the same deal.
In particular, the SEC is exploring if certain fee structures are incentivizing underwriters to secure unsuitable deals, thereby potentially putting investors at risk.
The banks that have received SEC requests for information include Citigroup, Credit Suisse Group, Morgan Stanley and Goldman Sachs.
SPAC sponsors typically pay banks a 5.5% fee for underwriting the IPO which is paid up front with the rest paid upon completion. Banks can earn more fees if they also go onto represent the merger target and help the SPAC sponsor raise additional cash from private investors to finance the takeover.
EV Battery maker SES holdings has agreed to go public through an SPAC merger with Ivanhoe Capital Acquisition Corp in a deal valuing the combined firm at $3.6 Billion.
The shares of the new firm are expected to trade on the NYSE under the new ticker ‘SES’. Singapore based SES specializes in hybrid lithium rechargeable batteries for EVs.
The deal is expected to generate $476 million in cash, which includes a $200 million investment from PIPE investors including Koch Strategic Platforms, Hyundai Motor, Kia Corp and General Motors.
Ivanhoe raised $276 million in its IPO in January. Goldman Sachs Group has served as financial advisor to SES with Morgan Stanley working as an advisor to the PIPE investors and Ivanhoe.
Policygenius, an online insurance marketplace, is planning to go public through a proposed SPAC merger with PWP Forward Acquisition Corp.
Founded in 2014, the company bas helped over 30 million customers shop for insurance in the US and has placed almost $100 billion in coverage.
The New York based firm has raised funding from investors including KKR, Norwest Venture Partners, Revolution Ventures, AXA Partners and Transamerica Ventures.
PWP Forward has raised around $212 million in an IPO in March and intends to focus on enhancing access to financing for companies found by, led by and enriching the lives of women.