from the next day Something big to destructive error, the global SPAC market has seen a few big years. So-called blank check companies, which take on a public structure company with the aim of later merging with a private entity, can provide a fast track to global stock markets. They can also, as we’ve learned again in recent quarters, burn shareholder wealth and potentially expose retail investors to significant risk.
The 2020-2021 period of investor excitement led to an increase in SPAC listings and, later, pools. The result of the deal spree, centered in the US, was largely a series of smoke pits in public markets. This is not news, entirely. It’s been a while since TechCrunch announced that the SPAC wave had failed, at least in terms of taking a beneficial part of the backlog unicorn audience; The number of startups worth $1 billion or more that need to find a way out is growing every month, a trend that SPACs have been unable to stop.
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But while SPAC may also be a bad word in the United States today, there is a blank check activity elsewhere that deserves our attention. Most notably, this week’s SPAC group from Deezer, a European music streaming service that competes with Spotify. Taking the SPAC route in late 2022 may seem like an opposite direction, but there are some regulatory and selection-based differences in European public markets that have left us with a slightly more palatable taste in our mouths regarding the Deezer deal. (Our initial reading of the deal can be found here.)
However, the company lost ground in the first trading sessions, which means that some elements of the SPAC deals look similar on both sides of the Atlantic. Let’s talk about the bottom line of the Deezer deal, how quickly the IPO market is changing in general, and then delve into the European SPAC market in the wake of Deezer’s debut.
Deezer SPAC Deal
according to to the companyAfter Deezer finalized its merger with public company I2PO, it raised €143 million of new capital in the SPAC deal. This figure includes funds provided by a SPAC partner and private funds flowing into a public company (PIPE) from former Deezer backers.
According to the company, the new capital will be used to “finance the next phase of growth.”
The amount of money Deezer raised might seem like a victory; Any round of nine figures in 2022 is a win, after all. But it’s less than it could have been with Deezer Noting in her press release SPAC That his IPO partner has “€275 million…in a designated deposit account” along with a PIPE deal worth “up to €119 million”. So how did Deezer end up with just 143 million euros? Refunds, in one form or another, or money withdrawn from the deal by “opposing market contributors,” the companies involved said.
However, the capital was raised and shares circulated. This is a win, yes? Little. After trading at just under €10 per share prior to the merger, Deezer shares are down to €6 per share as of the time of writing, indicating that while the deal is complete, work remains for the music streaming company to convince investors to tap their legs with its beat.