(ATF) Bridgetown Holdings, the special purpose acquisition vehicle (SPAC) set up by Hong Kong billionaire Richard Li and PayPal co-founder Peter Thiel is looking at a merger with Tokopedia that could value the Indonesian e-commerce firm at $10 billion.
A deal on this scale would add significant heft to the developing Asian market for SPAC-driven dealmaking.
It could generate a payout for SoftBank, one of the backers of Tokopedia, and this in turn could prompt SoftBank founder Masayoshi Son and his advisers to accelerate their own plans for SPAC-based deal making.
SoftBank has been the biggest single technology investor in the world in recent years via its Vision Fund but is now looking to change the way it invests and monetises its existing holdings - which include stakes in many Asian companies, such as China’s Didi Chuxing, Paytm in India and Grab in Singapore.
SoftBank was an early backer of Tokopedia, alongside China’s Alibaba, while other investors include Google-owner Alphabet and Singaporean state investment fund Temasek.
Bridgetown Holdings completed a $550 million IPO on Nasdaq in October via underwriters UBS and BTIG in one of the higher-profile SPAC launches amid a wave of deals in 2020.
SPAC US IPO capital raising has already hit $70 billion this year and accounted for over 50% of total US IPO fund raising, while exchanges in Asia and Europe are also looking to boost activity in the field.
The sheer volume of deals has led some analysts to predict that there will be a slowdown in activity in 2021 and that many blank cheque vehicles will struggle to find viable investment opportunities, in turn affecting performance for listed structures.
A widely read prediction this week by Goldman Sachs equity analysts that SPACs could drive $300 billion of merger and acquisition activity in the next two years has countered this pessimism, however.
And if a deal to merge Bridgetown with Tokopedia does go ahead then further SPAC-driven dealmaking in Asia could be seen.
Stock price surges
Reuters and Bloomberg reported that Bridgetown is looking at a deal - which would explain a surge in Bridgetown’s stock price on Tuesday December 15.
Bridgetown Holdings was trading at $11.74 a share on Nasdaq on Monday December 14 - just above its October listing level of $11.50.
By the US trading afternoon on Tuesday December 15 Bridgetown had pushed up to over $14.50 a share.
The potential for price gains in SPACs as acquisition plans come together is driving higher volumes in individual vehicles.
It is also expected to drive future demand for exchange traded funds (ETFs) that provide easy access to multiple SPACs.
There are plenty of market structure issues to be addressed as the SPAC boom matures with the addition of investor-friendly structures such as ETFs.
But funds that offer investors the chance to go long or short and express a view on SPACs are likely to see growing interest - especially if high profile SPAC-related deals attract the attention of diverse investor types, including retail as well as high-net-worth or institutional buyers.