Special purpose acquisition company (SPAC) buyers are looking at more stringent, aggressive terms as the popularity of these types of investments grows, Bloomberg reported.
Some of those looking at higher restrictions include bosses like SoftBank founder Masayoshi Son and Silicon Valley investor Vinod Khosla, the report stated.
And this week, at least three SPACs looking at U.S. listings — the SoftBank Vision Fund, Huffington Post Co-Founder Ken Lerer and tech investor Vector Capital — modified their deals to slice warrants this week, Bloomberg reported.
Usually, SPACs offer units at $10 a piece with one share and a fraction of a warrant, which gives holders the right to buy another share for $11.50. As they make the decision to sell stocks without warrants attached, they end up reducing the risk of further dilution, according to Bloomberg.
It shows how the better-known issuers now have the power to make their own agendas — even amid numerous other deals, Bloomberg reported.
The frequency of these changes is increasing lately. Other firms, like Dragoneer Investment Group, made the changes with the firm’s recent SPAC from November, which also did away with warrants, Bloomberg reported. Khosla, meanwhile, has been without warrants on all his firm’s SPACs announced since last month.
Other firms, including Thoma Bravo, a software buyout firm, growth investor Altimeter Capital and Richard Li, the Hong Kong-based billionaire, have done the same types of structure as well, Bloomberg reported.
The IPO market, after being speculated to get weaker during the pandemic, has been scorching as of late, with SPACs making up a great amount of the total.
Analysts said there were around 480 initial public offerings (IPOs) in just the U.S. markets, up more than 100 percent from the previous year.
There have been around 189 SPACs going public in 2021 alone thus far, widely outpacing the 248 seen in all of last year.
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