Side-by-Side Comparison of the Twelve Seas and LF Capital SPAC IPOs
by Kristi Marvin on 2018-06-20 at 8:43am

Twelve Seas Prices an Upsized $180 Million IPO and LF Capital Prices $135 Million IPO

Last night, both Twelve Seas Investment Company and LF Capital Acquisition Corp. priced their initial public offerings and will begin trading today under the symbols TWLVU and LFACU, respectively.

Both SPACs were of a similar size (as of yesterday), but Twelve Seas did a surprise upsize to $180 million, whereas LF Capital raised $135 million in total gross proceeds.  I thought it would interesting to see a side by side comparison of terms to demonstrate the differences in structure and why some SPACs are able to upsize their offerings.  To be clear, an upsized offering does not  mean one deal is better than the other.  It does show investor interest or more specifically, institutional interest.  However, quality of offering and investor interest are sometimes not aligned. Let’s take a look.

Twelve SeasLF Capital
Sector FocusPan-Eurasian RegionFintech
Initial Filing $mm$100.0$135.0
Last Amended S-1 $mm$150.0$135.0
Final Gross Proceeds Raised $mm$180.0$135.0
% Held in Trust / Per Unit100% / $10.00102% / $10.20
Backstop?NoYes
Anchor Investor?NoYes
Sponsor Private PlacementUnitsWarrants
Shares11
Warrants11
Rights10
# Months to Complete1824
UnderwritersEarlyBirdCapital / I-BankersB.Riley / Raymond James

As you can see, the real difference between Twelve Seas and LF Capital comes down to three items:

  • Unit structure:  In addition to one Share and one Warrant, Twelve Seas is offering a Right.  LF is not.
    • Offering a Right in addition to the Share and Warrant means additional potential upside to unit holders. Another “free look”.
  • Time horizon: Twelve Seas is offering a shorter time period to complete an acquisition (18 months vs. 24 months for LF Capital).
    • As an investor, institutional or otherwise, a shorter time period means a faster return on investment.
  • Backstop/Anchor Investor:  Twelve Seas does not have a Backstop/Anchor Investor. LF has BlackRock Funds acting as Backstop/Anchor.
    • Having a backstop and anchor means less negotiating power for institutions at the time of conversion/redemption.  By virtually guaranteeing the combination will close, the SPAC has more leverage for determining the conversion/redemption price even if the announced transaction is a so-so to below average deal. 

But here’s the real difference: All three of the above terms mean that as an investor, the terms are more favorable for Twelve Seas.  BUT… if you’re a SPAC management team, LF Capital’s terms are slightly more favorable to the SPAC.  Which is why LF had to put additional at-risk capital into the trust to bring the percentage up to 102% to get investors into the deal. To explain further, LF has an extra six month cushion for completing a transaction, they don’t have the added headache of a Right in their capital structure, AND they have a backstop investor to protect the cash in trust at closing.

So again, determining which structure is more appealing really depends on which side of the table you sit. Are you an investor or SPAC management?  Luckily, as a SPAC, there are a number of different term-levers you can pull or push to get your SPAC where you and your investors need it to be.  In the end, both of these two SPACs raised a good amount of capital and everybody wins. For now.

The clock just started ticking….

Congratulations to Twelve Seas and LF Capital.

Underwriters for Twelve Seas:  EarlyBirdCapital Inc., I-Bankers Securities, Inc.
Underwriters for LF Capital: B. Riley FBR, Raymond James

 

Recent Posts
by Nicholas Alan Clayton on 2024-03-29 at 7:38am

At the SPAC of Dawn On a day when the US markets are closed, there’s always a chance of SPAC actions sliding by as the SEC has left its EDGAR filing system open. Right on cue, Welsbach Technology (NASDAQ:WTMA) filed that it had come to a definitive agreement with battery production technology firm Evolution Metals....

by Nicholas Alan Clayton on 2024-03-28 at 1:35pm

News and Rumors PR: Bannix (NASDAQ:BNIX) has provided more information on the combination with VisionWave that it announced yesterday, specifying that the imaging technology that VisionWave will acquire from GBT Technologies will primarily seek out applications in military combat scenarios and geological surveys. PR: Grove Collaborative (NYSE:GROV), which combined with Virgin Group II in June...

by Nicholas Alan Clayton on 2024-03-28 at 7:47am

At the SPAC of Dawn Fed Chair Jerome Powell has given new hints that the administration would be showing greater levels of comfort with inflation if a cut could help improve unemployment numbers. Those numbers could get an update today at 8:30 am ET to bring new jobless claims as well as final prices for...

by Nicholas Alan Clayton on 2024-03-27 at 1:31pm

News and Rumors CNBC: Former WeWork (OTC Pink:WEWKQ) founder Adam Neumann has offered to buy back control of the company for $500 million but has yet to secure the necessary financing. WeWork went public with BowX in October 2021. PR: Satellite telecom firm Spire Global (NYSE:SPIR) has signed an agreement to build and launch two...

by Nicholas Alan Clayton on 2024-03-27 at 11:38am

Bannix (NASDAQ:BNIX) has entered into a definitive agreement to combine with VisionWave Technologies for $30 million. The combined company is expected to trade on the Nasdaq once the deal is completed with an initial outside date of September 14. Transaction Overview Bannix has about $17 million in its trust after seeing 77.4% of its shares...

logo

Copyright © 2023 SPACInsider, Inc. All Rights Reserved