A vital source of capital raising for aerospace companies (abbreviated from “private acquisition company” in English) are private sector investors.
There is now a much lower interest rate here than enough to supply the hundreds of players who have been listed in the hype, according to the Financial Times.
Spac listings, made by listing a shell company with the sole purpose of filing a quick file with a hungry company for listing with actual operations, are often done with one of the financial celebrities behind them. The phenomenon also found its way to the Stockholm Stock Exchange, where investment firm Bure listed fictitious acquisition company ACQ Bure on March 25.
It is the so-called “pipeline” capital called Senat, short for “private investment in public equity” where large funds and other investors buy larger holdings in companies at a certain discount, often in relation to a listing.
Fund companies directing such capital has been plentiful since the space hype gained momentum last year. Now, however, the sheer volume of transactions has exhausted investors, according to the Financial Times.
“The pendulum has swung into a position where it becomes extremely difficult for those with ready-made piped investments to find their target at the moment. If spac does not find its tube, on the other hand, it disappears into a sea of other unfunded space companies,” one newspaper source said. .
Almost 500 companies have so far implemented the spac listing during the year and with the listing itself come some basic requirements, such as that the company usually has to find the target company to implement a reverse merger within 24 months. Otherwise, the financing obtained in the funding rounds and issuance prior to listing must be returned.
So far, only about 25 percent of space companies have found their target as of 2019, the year in which far fewer companies have listed space companies.
The number of newly listed space companies is now also starting to slow. During the first seven days of April, four space companies were listed, and apparently fewer than 41 companies during the first week of March and 28 in February.
“We were in the middle of the madness in January and February, and now it has slowed down and has stopped on the listing side,” said Reed Smith, the company’s chief affairs officer, Ari Edelman.
The success of spac notes that found their purpose varied. However, one criticism that has been raised against the listing model is that it can impair visibility and transparency, something that was, for example, the case for Nikola’s hydrogen trucking company.
Nicola was one of the first companies to get ready for a fast file, but the stock collapsed and is still around during the listing price after a short selling professional examined the company and came to the conclusion that development founder and CEO Trevor Milton bragged about it. It was fake.