SPACs Race to Hong Kong

Today we cover $SBEA, $KVSB, $RTPY, and more…

Hong Kong is set to join the US, UK, Malaysia, and Singapore in letting SPACs list on its Exchange, but the proposed regulation may be the toughest yet. Also, a Coffee Brand looking to uplift Veterans closes a SPAC deal and two high-profile SPAC deals are set to be approved today. Read on to find the latest on all things SPACs.


SPACs are Prepping to List on HKEX as Consultation Ends

  • Hedge Funds and Deal Makers are courting wealthy clients to launch SPACs as Hong Kong Exchanges and Clearing nears SPAC Approval. 

HKEX Chief Nicholas Aguzin announced that a decision on SPACs would be made soon after a 45-day consultation period ended on Sunday, hinting that the first SPACs could hit the market soon. Under the proposed rules, a SPAC will have two years to announce a transaction and three years to complete the merger.

HK’s capital requirements for a SPAC are the highest across markets, with a minimum of $HK1 Billion ($128 million) to list. The rules also ban retail investors from participating in trading before a merger closes, with only accredited investors with a net worth of HK$8 million being allowed to trade SPACs. 

Black Rifle Coffee Closes $1.7 Billion SPAC Merger with $SBEA

  • Veteran Focused Black Rifle Coffee is going public through a SPAC Merger with SilverBox Engaged Merger Corp, in a deal that values the combined company at $1.7 billion. 

Gross Proceeds from the deal are estimated to be around $545 million, which includes $345 million held in the SPAC trust, $100 million in PIPE Funding, and an additional $100 million through a forward purchase agreement with Engaged Capital (Engaged is the Hedge Fund backing SilverBox). The incentives of the deal seem to be aligned with investors, with 7.5% of founder shares being forfeited if the stock doesn’t appreciate at least 50% and an additional 7.5% if the price does not appreciate 100%. 

Black Rifle Coffee is known for its firearms-themed products and also sells branded apparel to promote veterans and first responders. The company was founded in 2014 by former Green Beret Evan Hafer, who vowed to hire 10,000 veterans after Starbucks promised to hire 10,000 refugees following an executive order from former President Donald Trump to prevent refugees from entering the country. Black Riffle has been capitalizing on rising consumer interest to shop at brands that support social causes, with more than half of its 600 employees being military veterans.

The company expects sales to grow about 40% this year to $230 million, with a majority of the sales coming from online sales. Black Rifle also has seven physical stores across the US and distributes its products through retailers like Walmart. The stock seems to be listing at a premium, with the company citing in its investor presentation that it would trade close to 4x FY23 Enterprise Value/CV. 

Reddit Reads

$ORGN Completes Installation of Key Production Modules for Origin 1 Six Months Ahead of Plan

Original Materials announced that it has successfully lifted and installed its previously fabricated key production modules for its first manufacturing plant in October, six months ahead of schedule. The construction of Origin 1 is on budget and track for completion by the end of 2022, with commissioning and production start-up beginning thereafter.

$SKINW Redemption Deadline Set for Tomorrow 

The Beauty Health Company’s warrants will be void on November 3rd if they aren’t exercised and will only revive $0.1 per warrant. Warrants are currently trading close to $16, which would imply a return of -99.5% tomorrow.

Have you Heard of SPACs? 

Reddit Reads

$KVSB Shareholders to Vote Merger with Nextdoor 

Shareholders of Khosla Ventures Acquisition Co II are voting today to approve the merger with Nextdoor. Khosla Ventures announced that 13% of public shares were redeemed and it expects the merger with Nextdoor to close on 5th November.

The transaction will raise $363.3 million from the SPAC trust and $270 million from a PIPE placement, resulting in $633.3 million in gross proceeds (after accounting for the 13% redemption).

$RTPY Shareholders Vote to Close $1.8 Billion Merger with Aurora 

Reinvent Technology Partners Y expects to close its deal with Aurora tomorrow if shareholders approve the merger today.

Once the merger closes, RTPY will change its name to Aurora Innovation, with the stock ticker changing to ‘AUR’ on November 4th.


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