L Catterton Prices $250m SPAC IPO As Global Listings Raise Record $60b So Far This Year

L Catterton Asia Acquisition Corp, a special purpose acquisition company (SPAC), launched by consumer-focused private equity firm L Catterton, has announced the pricing of its $250 million IPO on Nasdaq.

The Singapore-based SPAC’s IPO priced 25 million units at $10 each, with every unit consisting of one share of common stock and one-third of a warrant, exercisable at $11.50. The units will be listed on the Nasdaq under the symbol “LCAAU” and are expected to begin trading on Nasdaq Thursday.

The offering is expected to close on March 15, 2021, subject to customary closing conditions, with Credit Suisse Securities (USA) LLC acting as the sole book-running manager.

The SPAC, led by managing partners of L Catterton Asia, said it has not selected any potential business combination target at the moment but stressed that it may pursue an initial target business in high-growth, consumer technology sectors across Asia.

L Catterton Asia’s SPAC is the latest to join a frenzy of IPOs involving blank cheque companies without operations that are formed only to raise capital to acquire other businesses. Merging with a SPAC has become an increasingly popular method for closely-held businesses to raise capital for growth.

SPACs taking global markets by storm

According to data released by Refinitiv, the first three months of 2021 saw an explosion of SPAC IPOs around the world, with 199 listings that raised at least $60 billion, a quarterly record. The figures are way higher than the 15 listings that raised $3 billion in the first quarter of 2020. For the entire 2020, there were 256 SPAC IPOs that raised $79.3 billion.

February 2021 also saw a record number of IPOs and amount raised, on a month-on-month basis, with 103 issues that secured $34.6 billion, according to the Refinitiv data.

In terms of SPAC M&As, the first three months of the year have already posted 71 deals valued at $156 billion, nearly the same amount raised from 163 deals in the entire 2020.

SPACs are increasingly taking global markets by storm and now spreading to Asian financial markets, with Southeast Asia becoming a prime hunting ground for SPACs, given the region’s promising tech unicorns. 

The biggest SPAC in Southeast Asia is Bridgetown Holdings, which is backed by Hong Kong tycoon Richard Li and venture capitalist Peter Thiel. 

Bridgetown, which raised $595 million, is reportedly considering a potential merger with Indonesia’s e-commerce giant Tokopedia in a deal that could value the unicorn at $8-10 billion.

Early this week, Model Performance Acquisition, a Hong Kong-based blank check company led by ex-Templeton Asset Management North Asia private equity co-head Claudius Tsang, filed with the US Securities and Exchange Commission (SEC) to raise up to $50 million in an IPO. The SPAC will pursue prospective targets in Asia.

Among other SPACs that are currently scouting for targets in Southeast Asia include COVA Acquisition, Crescent Cove’s $300-million vehicle, that also listed in February.

Southeast Asian ride-hailing and delivery giant Grab Holdings Inc is also reportedly exploring going public in the US through a merger with a blank-check company as it seeks to expedite its listing process.

SPACs have existed since the 1990s. But the so-called blank-cheque companies really took off last year as investors, flush with liquidity, started looking for returns in a low-interest rate, low-yield environment.

However, the SPAC process is not without challenges.

Criticisms of the SPAC model include the fact that companies looking to list through this route are allowed to project robust growth expectations – which companies filing for the conventional initial public offering are restricted to do.

“As long as there are good quality companies coming to the SPAC market, I think there will be a continuous supply of, and demand for, SPACs. When the quality deteriorates then maybe at some point, people will be less enthusiastic,” Helen Wong, partner at Qiming Ventures, said at DealStreetAsia’s webinar SPAC to d-SPAC: What’s next for the hottest fundraising vehicle.