Two SPACs are anticipated to price on Thursday, but there’s a chance we get all three.
It’s looks like we’re going to have a double header this week, since we’re hearing that Fintech III has moved their pricing to Thursday, alongside AMCI, which is already on the calendar for the same day. Plus, there’s the wildcard of Boxwood Merger Corp., which could make Thursday a hat-trick.
However, in light of the crowded schedule we thought it would be a good idea to summarize the terms for comparison:
Besides the obvious difference in the amount of warrants included in AMCI’s unit and AMCI’s life (18 months), both Boxwood and Fintech III look pretty similar as far as structure. This leaves us to focus on the other key differences – sector focus, team and to a lesser extent, underwriter. However, regarding underwriter, it’s not as important at IPO as it is at combination. To be clear, the underwriter’s capital markets skills are still important upfront, but they are crucial on the back end when trying to steer a deal through the completion process. However, all of the above three deals have underwriters with solid names and SPAC experience – it’s a bit of a level underwriting playing field.
Nonetheless, even just evaluating sector focus is difficult because as we’ve seen, a SPAC can really combine with a company in any sector. Just look at Hunter Maritime, which was an extremely focused shipping team that wound up presenting a deal with a Chinese fintech company. They don’t call it a “blind pool” for nothing. So ultimately, we’re left to focus on team.
Looking at the teams of all three of these IPOs, the Fintech team is the one with two successful SPACs under their belt – Fintech I, which combined with CardConnect (and was ultimately bought by First Data for $15.00 per share), and Fintech II, which combined with International Money Express (IMXI) and closed yesterday at $12.50. As we’ve said, over and over, experience in SPACs counts. That’s not to say that AMCI and Boxwood can’t bring just as good deals, but it’s a lot easier to make a bet on a team with a track record and knows how to navigate the always challenging “de-SPACing” process.
So, which one is going to have the most demand at IPO? Only the book-runners really true know what their demand looks like (and frankly, if you them asked them, every single one will tell you demand is HUUUUGE, regardless of whether it is or not), but it’s hard to argue with betting on the Fintech III team. Two previously successful deals gives them the edge.
Lastly, regarding AMCI, this SPAC recently amended its terms. They went from 1/2 warrant to a full warrant and 24 months life to 18 months. Those are costly changes to the SPAC management team and were needed to sweeten the deal. So, are these changes to the terms enough to get investors clamoring for this SPAC or is the change itself a sign of investor apathy? Well, we’ll know soon enough, but my bets on Fintech III as the SPAC to most likely trade well above $10.00 day-one.