The SPAC/IPO space has been nothing if not high-flying, with scores of listings thus far into 2021 alone. But amid the deluge of filings, there may be speed bumps. To that end, the PYMNTS/SPAC Tracker finds that year to date, 11 firms have announced plans to go public; that’s matched by the same number of firms with similar ambitions in the financial services space.
Drilling down a bit, FinTechs across a global stage have been announcing plans to raise funds through the SPAC model, or through more traditional listings. In one example, Chinese FinTech Linklogis, with backing from eCommerce giant Tencent, said that it will seek to raise the equivalent of about $1 billion, through a traditional IPO listing in Hong Kong. The firm focuses on supply chain financing in China. The listing is slated for early April. Elsewhere in the SPAC space, Pitango Venture Capital announced a SPAC, Israel Amplify Program (ISAP). That entity, which is seeking to merge with an Israel-based tech company, will target a $200 million raise.
But signs show that there are at least some speed bumps in the mix. Israel’s video cloud management firm Kaltura delayed an IPO, TechCrunch reported. The reason, as the site noted: lower valuations and demand than had been expected.
As to whether there might be a lull (or worse) in overall demand for the firms that do go public, The Wall Street Journal reported this week that shares of SPACs “are wobbling around their initial public offering price in March after surging” earlier in this year. One culprit may be that higher bond yields have been gaining investor favor. SPACs have been rising an average of just a few basis points on their first day of trading during March debuts – a marked decline from the mid-single-digit percentage point gains seen in initial trading days logged earlier in the year.
InsurTech Gaining Interest
Among the digital upstarts, though, there are pockets of promise. And in an interview with PYMNTS, Thomas Mason, senior research analyst, S&P Global Market Intelligence, noted that while there have been SPAC deals in all of the FinTech sectors tracked by his firm (payments, digital lending and investing), “InsurTech, in particular, seems to be hot. There are a lot of fast-growing companies in that space that are relatively young and now underwriting their own policies. We call this a ‘full-stack company,’” said Mason.
That designation, he said, sets these InsurTechs apart from digital agencies that sell policies, but don’t underwrite those same policies. To compete with traditional insurance firms, these smaller players need access to capital, and to assure regulators that they can pay out claims.
“It makes sense to raise that regulatory capital from the public market, since VCs might want their money going more to things like technology and hiring talent. But the regulatory capital is still key to the full-stack InsurTech’s growth,” said Mason. He pointed to plans from firms like Hippo (which announced a SPAC path to listing last month, as an example). There is also growing interest in the PropTech space, he said, with deal-making/IPOs illustrated by recent listings by Opendoor and Offerpad.
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