Even before the air came out of the technology stock, it came out of the spooky bubble. Those issues through a merger with an inactive wallet company set up just to find a viable company to put it on the stock market turned out to be mostly bad. Ironically, today, after the great upheaval on the Nasdaq, it is actually more difficult to find differences between the shares of Spack and the shares of companies issued in the classic route, most of which dived 90% -70%. This is in contrast to a large group of “zombies”, companies that are in the process of merging, but are unable to complete it due to the sharp change in the markets.
On the one hand, these companies have already publicly disclosed their performance and incurred high costs of tens of millions of dollars on their suitability for public access. On the other hand, the new levels of value and the escape of funds from the spikes made the whole event worthless. Over the past year, more than 50 mergers with Spacks have been canceled and today there are 114 companies in the process of being issued, most of which will probably be canceled due to the dramatic change in market pricing. But even today there are 600 spas including $ 100 billion that companies have not found to merge with. Towards the end of 2022 most of the spikes whose lifespan is 24 months will expire, and those who have not yet found a “match” will have to return the money to investors plus interest for the period. The prevailing assessment is that most spook entrepreneurs will return the money to investors, because it is difficult to find a company today that is willing to go on an adventure. This is not only for an image reason, but also because of the understanding that it will not be possible to raise money in this way because the institutional investors are no longer willing to participate in PIPE rounds, while the investors invest most of the money and that it is a longer and more expensive process.
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Founders of Pagaya. On the right, Avital Pardo, Yahav Yolzeri and Gal Krubiner
(Photo: Inbal Marmari)
Apart from Ituro, there are 3 other Israeli companies that are in the process of Spock. The largest is the fintech company Pagaya, which in September 2021 signed a $ 8.5 billion merger agreement with Spock. Last January, when NASDAQ was already showing weakness, Pagaya updated on increasing its PIPE fundraising to $ 350 million. The second candidate is the Stickspay satellite company, which is expected to complete a relatively small issue of Spack at a value of less than $ 1 billion and therefore, apparently, it will be completed. Selena have already realized that the matter is going to be more complex than expected and have meanwhile raised $ 147.5 million in debt with a high interest rate of 6%. Funds put up debt at an unimaginable rate in the last decade, and this is just the beginning.
“There are two types of companies that went to Spacks – those who really need the money and those who really liked the value that could have been obtained that way,” Ilan Paz, CEO of Barclays Investment Bank in Israel, told Calcalist. And the second type simply prefers to withdraw from the transactions. Whoever went to Spack for the value, it is better for him to wait and not make an IPO in the current market. “In my opinion, most of the Spacks will return the money and return to their natural place as an alternative device that is only suitable for a certain type of companies that are important for them to become public, but operate in a market that the investing public does not like.”