Tag Archives: special purpose acquisition company

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Social Capital SPAC Machine Latest: $500m Blank Check Company to Roll-Up Makers of a Stupidity Vaccine!

Social Capital SPAC factory run by SPACmeister, notorious Tweeter and promoter of RedditArmy favorite stocks Chamath Palihapitiya is rumored to have filed a confidential S-1 for his latest Special Purpose Acquisition Company, (aka SPAC). The entity is to be called SIDS Acquisition Corp. According to sources, @chamath aims to focus on “biotech companies that are creating vaccines for those who suffer from acute stupidity”. The acronym is a play on Forrest Gump’s famous line: “Stupid Is as Stupid Does”

From the “believe it or is it nuts?” news department, Palihapitiya, who is also Chairman of Spaceshot SPAC VirginGalactic has assembled a board of biotech innovators, famous billionaires, notorious disruptors, and finance industry geniuses to identify and ferret out SPAC merger candidates. From the biotech world, Theranos co-founder Elizabeth Holmes will be in charge of due diligence, Mark Cuban and Elon Musk will oversee funding strategies, and CNBC host Jim Cramer will serve as the designated head of PR, Communications and “P&D”. Famous financier Max Bialystock is slated to be the CFO for the new blank check company.

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SIDS Acquisition Corp Executive Team

According to unconfirmed sources, SIDS Acquisition has already engaged online trading platform Robinhood to include this listing in a new “private share offering module for the masses” that will offer access to buying the SIDS SPAC on a pre-IPO basis. Elon Musk is said to be overseeing a pact with soon-to-IPO “Coinbase” so that bitcoin and dogecoin can be used by the RedditArmy and others to purchase pre-IPO futures contract in the latest Social Capital SPAC.

Noted Peter Thiel, one of the sharpest early-stage investors of this generation, is said to be getting his checkbook ready for this blank check company and plans on deploying $100 million. Said a spokesperson for Thiel, “If there was ever a moment in history when there should be a vaccine for stupidity, this would be it!”

MarketsMuse Editor Caveat Emptor: Yes, the above news story is fake news and intended only to parody the current cycle of craziness, stupidity, and speculation taking place across the US equities market. What is NOT FAKE NEWS IS THIS STORY, PROFILING INVESTOR FRAUD ARTISTS FROM A FAKE COMPANY THEY CALL “SEAQUAKE”

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Nasdaq Bets on Blank-Check Co. IPOs To Boost Listings; SPACs are Sizzling

Competition for listings is a contact sport in the world of major stock exchanges as evidenced by the assortment of US bourses vying to increase market share in exchange-traded fund (ETFs), which represent nearly 2000 securities or more than half of all equities listed on major US stock exchanges.  While the NYSE has long been the place-to-list for issuers of ETFs, Nasdaq has proven to have sharp elbows in not only soliciting ETF issuers (with BATS taking a distant third), Nasdaq now has another card up its sleeve-the exchange operator is aiming at another listing product known as blank-check companies and is aggressively biting at the heels of Intercontinental Exchange Inc.’s NYSE, which has carved out a niche in the listing of these companies, more formally known as Special Purpose Acquisition Companies aka SPACs ™. In an effort to grab market share in this product away from NYSE and boost IPO listings (and hence more fees from Issuers and more revenue from distributing market data) Nasdaq recently filed proposed new rule changes with the SEC that will make it easier for SPACs ™ to list on that platform.

According to reporting by Alexander Osipovich of the WSJ, 22 blank-check companies have floated IPOs so far this year, raising nearly $7bil.

Special Purpose Acquisition Vehicles are shell companies that raise funds via a public offering whereby the proceeds are managed by a pre-selected team of industry-specific executives who receive an equity stake in the shell and are charged with acquiring an existing private company or in some cases, several private companies and roll those companies into the existing publicly-traded entity. In the event an acquisition cannot be identified and approved by an overwhelming majority of the shareholders within [typically] 24 months of the IPO, 95% of the funds raised are returned to the shareholders.

The investment vehicle construct was first created in the 1970’s, but soon fell out favor after regulators uncovered widespread abuse by operators of  blank check company managers, which led to multiple cases of securities fraud charges against many different firms.  The blank check model was later refined in the early 1990’s by GKN Securities, whose principals created a much tighter construct and trademarked the SPAC™ acronym. GKN successor firm boutique investment bank Early Bird Capital since carried the torch of its predecessor; during the past ten years, Early Bird has underwritten and/or co-managed nearly 75 SPAC™ IPOs that have raised over $4bil.

Early Bird’s early success has not gone unnoticed by leading Wall Street firms; 6-pack investment banks Goldman Sachs, Merrill Lynch, and Deutsche Bank among others have crowded into the space that Early Bird Capital forged. In 2017 alone, SPACs™ have raised nearly $4bil for an assortment of acquisition-minded firms.

According to Paul Azous, CEO of Prospectus.com, a consultancy that assists companies throughout the course of preparing investor offering documentation and via a captive network of securities attorneys, the firm also advises companies seeking to list on stock exchanges, “The blank-check concept is in vogue once again, and we’re working with at least two clients who have targeted specific industries that are seemingly ripe for roll-up.” Added Azous, “With Nasdaq easing the listing burdens, strategy of creating a public shell that can with reasonable ease, roll a private company into that publicly-listed entity should provide a good shot-in-the-arm to IPO activity, which has experienced fits and starts in each of the last several years.”

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