Posted by Muhamad Yazdi > 2014-06-27 11:36 | Report Abuse

Hi guys. I have some views on SPAC which i posted on my blog which has some views on what is a SPAC, are the investors paying too much and how much the management is getting. Main points / snippets: In my book it is like a private equity investment model made available to the public. Private equity investment is where people pool their money together with the intention of investing in businesses that will generate profit and cash flow back to the shareholders. The main difference between SPAC and a conventional private equity model is that in a conventional private equity model... ...But then you need to remember that the company does not have to return back the 10% of funds raised from the IPO and up until recently when the regulators changed the guidelines, that amount could be used to pay the salaries of the management. With regards to the 3 SPAC above, the approximate numbers are RM23 million for Hibiscus, RM36 million for CLIQ and RM55 million for Sona, CASH. Not a bad return for all the cost and expenses in setting up the SPAC and going through the IPO... ...Why does SPAC issue warrants? Warrant is an instrument of chance and probability. It is a derivative where the return on the warrants depends on the price of the shares (in this case shares of SPAC) rather than the intrinsic value of the company (directly). As we have discussed earlier, price and value are two different things and hence the price of share depends, significantly, over the demand and hype of the shares rather than just the valuation of the shares... http://mymusingsmalaysia.blogspot.com/2014/06/spac-ipos-of-o-unravelling-acronyms-so.html If you have other opinions and insights, i would be grateful if you could share it with me / group. Thanks.