Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Book a demo

Pricing

Ready to get started?

What is the Difference between a SPAC and an IPO?

What is the Difference between a SPAC and an IPO?

Rupert Walford

25 years: Capital markets

In this video, Rupert explains the differences between the SPAC merger route to a public listing and a traditional IPO and analyses the pros and cons - and whether the SPAC merger route does in fact provide a better alternative.

In this video, Rupert explains the differences between the SPAC merger route to a public listing and a traditional IPO and analyses the pros and cons - and whether the SPAC merger route does in fact provide a better alternative.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

What is the Difference between a SPAC and an IPO?

9 mins 22 secs

Overview

In this video Rupert looks at the key differences between coming to the public markets via a merger with a SPAC and via a traditional IPO. Some of which include speed, execution risk and valuations.

Key learning objectives:

  • Identify the differences between a traditional IPO and a SPAC merger

  • Explain each of these factors in detail

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Summary

How do they differ in speed?

  • Becoming a listed company by merging with a SPAC is a simpler and faster process - taking typically 3 to 5 months - as opposed to a period of anything up to a year for a traditional IPO
  • The terms of the merger - including the valuation - are privately negotiated between the SPAC, its key shareholders, the target company and the investors in the PIPE - as opposed to through what is referred to as a “price discovery exercise” involving lengthy marketing and a public market book-build
  • For the SPAC merger a relatively small number of investors are required to be supportive to ensure the success of the deal - as opposed to a large number of investors and investor meetings required for a traditional IPO
  • There are also generally less onerous requirements for the disclosure documents with a SPAC merger

Which method involves less Execution Risk?

There can be a lot less execution risk following the SPAC merger route to a public listing. The SPAC has already IPOed and raised funds before discussions even commence with the target company. And provided investors are supportive of the merger, the terms of which have, as mentioned, been negotiated privately in advance, once the merger has been announced there is a relatively low risk of failure. For a traditional IPO on the other hand, success is very dependent on the success of the public book build, which is conducted right at the end of the process over several days and is therefore subject to considerable market risk - and can fail at the last moment through no fault of the company.

What are the Fees and other costs surrounding both a SPAC merger & IPO?

The fees and other costs associated with a SPAC merger can make it a more expensive route to the public markets than a traditional IPO. The bulk of the costs associated with a traditional IPO are the banks underwriting fees, which in the US are usually 7 per cent of the amount raised in the IPO. A SPAC will only pay a 2 per cent underwriting fee on the SPAC IPO proceeds raised and 3.5 per cent on the money raised in the PIPE - so the cost of this capital is lower than the cost of the equity raised in a traditional IPO.

What are some other fees and costs for a SPAC merger that need to be taken into account?

  1. Investment bank fees
  2. Costs due to share dilution
  3. Costs due to redemption of shares

Which is better in providing a better valuation for the company?

In the US, because the de-SPAC is regarded as a merger rather than an IPO, management projections are allowed to be provided to investors. Because of this - and because of the increased competition created by the currently large number of SPACs looking for assets, it can be argued that a better valuation for the company can be achieved than would be the case via a traditional IPO. The price discovery exercise associated with a traditional IPO has been tried and tested over many decades and arguably provides a valuation that is more reliable over the longer term.

How do the methods compare via their access to the public markets and amount of funding?

Because of the current market appetite for investing in companies coming to market via a SPAC merger, and because of the ability to market using management projections, a private company may be able to successfully come to market earlier in its lifecycle - and may be able to raise a greater amount of equity funding - than would be the case following a traditional IPO. On the other hand, the attractiveness of the SPAC structure for investors interested in trading opportunities such as hedge funds can lead to a share register which is less reliable than would be the case for a public listing via a traditional IPO.

Why might the SPAC merger route be attractive to a private company?

  • Faster process
  • Simpler process
  • Potentially better valuation
  • Earlier public listing
  • Ability to raise a greater amount of capital

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Rupert Walford

Rupert Walford

Rupert has over 25 years of experience in the financial services industry working mainly in international capital markets. He is currently a Managing Director at RBC Capital Markets in London responsible for ECM Execution and Healthcare ECM and Corporate Broking in Europe. Rupert was previously at Linklaters for 8 years, at UBS Investment Bank for 9 years as Head of Global Capital Markets Legal and as a member of UBS's ECM Execution team and subsequently at Deutsche Bank in Compliance covering ECM and Corporate Broking. Rupert has extensive experience in a wide range of investment banking transactions in EMEA, predominantly in the emerging markets and in particular Russia. He is also a qualified lawyer.

There are no available videos from "Rupert Walford"