SPACtacular boom vis-a-vis IPOs

TheStar Sat, Apr 24, 2021 09:40am - 3 years View Original


For some time, many exciting firms have stayed sheltered in private markets, an option afforded them by well-funded venture-capital investors like Son Masayoshi of SoftBank. (pic) As a result, the value of cash raised by IPOs as a share of US overall stock market value had been declining for years. Now, the pent-up demand to go public is being unleashed.

SPECIAL-PURPOSE acquisition company (SPAC) is the way to go these days. Pots of capital are being raised on Wall Street by investors. Such a blank-cheque company has marshalled more money and outnumbering traditional initial public offerings (IPOs).

On last count, SPACs have raised close to US$40bil (RM164.32bil) since the beginning of 2021, against US$20bil by the old way via IPOs. Funds raised through SPACs seek out private firms to merge with, ushering smaller flaky and unknown but performing enterprise into public markets. On the surface, it looks like something serious is now taking place.

SPACs vs IPOs

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