A special purpose acquisition company (SPAC) is a publicly traded shell company with no operating business created with the intention of taking a company public through acquisition. Once a SPAC completes an acquisition, it changes its name to the company it just acquired.
Traditionally, companies seeking to gain access to the public markets go through an initial public offering; however, SPACs have some advantages which help companies get public quicker. As a result, SPACs have seen significant interest from both companies looking to raise capital and investors seeking to invest in newly public and growing companies.
Artius Acquisition Inc. (AACQ.U) is a recent SPAC IPO focused on acquiring a company in the financial technology sector. Artius Acquisition could be an interesting opportunity because it is being led by Charles Drucker, one of the greatest fintech CEOs of all time. Drucker was the chief executive of WorldPay, an S&P 500 company that he grew at a rapid rate before selling it in 2019 for a whopping $43.5 billion. So not only can investors have a chance at getting early access to an attractive fintech company, but they have an outstanding deal-maker in their corner.
Artius Acquisition's SPAC IPO
Artius Acquisition went public in July 2020 raising $630 million in its IPO. The SPAC has 24 months to complete an acquisition or else it must return the money it raised from investors -- these are common investment terms for SPACs.
The SPAC is led by Chairman Charles Drucker and CEO Boon Sim. Drucker is well known for his time spent as the CEO of Worldpay, where the company's stock price appreciated nearly 700% before it was acquired by Fidelity National Information Services. While at Worldpay, Drucker focused on growing the company through acquisitions and he successfully completed five major acquisitions worth more than $15 billion.
Drucker's proven track record as the CEO of a major publicly traded corporation and his skill as an acquirer uniquely qualify him to lead a SPAC.
What Artius Acquisition could acquire
Artius Acquisition noted in its IPO prospectus that it intends to focus on acquiring a technology business providing software solutions to other businesses (B2B) or in financial services (fintech). The idea is that Drucker will leverage his extensive network of bankers and business owners to identify an attractive business willing to sell at a good price.
The best way to glean what the SPAC could acquire is to look at what Drucker has already acquired from his tenure at Worldpay. Two notable companies Worldpay acquired were Paymetric and Moneris Solutions. Both Paymetric and Moneris were financial technology software companies focused on facilitating global payments and payment processing. Together, these companies were acquired for a total of $13 billion dollars and demonstrate the kind of deals Drucker is capable of making.
Artius Acquisition's CEO Boon Sim is no slouch either. Sim had a 20-year career working as an investment banker including as the head of technology mergers and acquisitions at Credit Suisse.
Given the management team's extensive experience in financials and technology, inventors can expect an interesting deal to materialize. Private financial technology companies like Stripe, SoFi, and Robinhood have seen their valuations soar and would all be interesting candidates to go public via SPAC.
A SPAC boom
2020 has seen rising interest in SPACs from both selling companies and public market investors. Over 50 SPACs have gone public so far this year raising $19 billion. For companies, there are interesting advantages to raising capital with the structure. For investors, SPACs represent an opportunity to buy into an IPO before a deal has been announced and other investors rush in. Artius Acquisition is a good example of a pre-deal SPAC that investors should keep on their radar.