Ribbit LEAP Ltd. (NYSE:LEAP) announced late last night that it will not complete a business combination by its initial deadline of September 10, and will instead redeem all shares.
The SPAC will cease all operations on August 15 and shareholders will shortly thereafter receive $10.02 per share. The move marks another high-profile SPAC ending in liquidation as its sponsor, Ribbit Capital, has been a prominent fintech investor with earlier investments in Robinhood (NASDAQ:HOOD), Zillow (NASDAQ:ZG) and MercadoLibre (NASDAQ:MELI).
It also IPO’d with a highly customized SPAC structure designed to align the long-term interests of its sponsor with the target company including a $100 million forward purchase agreement and long-term lock-ups. But, in a letter to investors, Ribbit Capital conceded that the thesis behind this approach was “wrong.”
“Since LEAP’s listing, we held conversations with over 100 potential partners that met our initial criteria for growth, quality, and readiness. We discovered in the process either that those companies did not meet our standard for long-term projected value creation or that they viewed the merits of a transaction with LEAP as less compelling than a traditional IPO or, more commonly, staying private.”
For all of the talk about SPAC sponsors being the party seeking to cut a deal and run, it is interesting that Ribbit LEAP observed the opposite phenomenon in its prospective targets as its long-term alignment structures were more a detriment than advantage in negotiations.
The investor letter also cited other complications, first among them that “SEC commentary and actions contributed to a growing perception of the de-SPACing process as a riskier, more complicated path compared to conventional IPOs, discouraging the highest quality companies from giving the SPAC route earnest consideration”, despite the fact that fintech companies that listed via traditional IPO after Ribbit LEAP were down an average -49% from their IPO price themselves.
Ultimately, the Ribbit team explained that in a highly saturated SPAC market, they “saw little appeal in competing with offers from others willing to get a deal done at any cost.” This indicates that this may have been simply a case of unfortunate timing for Ribbit LEAP’s approach, which may have borne more fruit in a different SPAC cycle.
Israeli tech firms have made up an outsized proportion of SPAC activity and despite the ongoing tensions in its region, that dealmaking is continuing unabated. In fact, the SPAC named for the particular mission of taking Israeli firms public through SPACs, Israel Acquisition Corp. (NASDAQ:ISRL) in fact just took one step closer in completing that...
At the SPAC of Dawn Although the market has largely recovered from a negative stretch last week, the roller coaster is tilted back downward for Trump Media (NASDAQ:DJT), which slid -8% yesterday to $32.57 – one of its lowest points since closing with Digital World last month. Other SPACs and de-SPACs are having a more...
Remember the metaverse? Many do not. Meta’s (NASDAQ:META) attempted transition to virtually living and working seemed to mark a trend that went up and down quickly, but one SPAC deal has both survived that roller coaster and may rise with a second. Back in December 2022, Newbury Street (NASDAQ:NBST) announced a $1.85 billion combination with...
At the SPAC of Dawn Tucked into the bill that provides $95 billion in funding to American allies passed by the House this weekend is another measure that is likely to have far more impact on at least one pending deal in SPAC world. It would appear that the timing was fortuitous for TikTok rival...
With the passage this weekend of $95 billion in funding for Ukraine, Israel and Taiwan by the House of Representatives, some focus has gone back towards the defense sector, which has generally had a good year as a whole. But, SPACs have not been as active in defense, despite the fact that companies in the...