SPAC Deep Dive, subSPAC

subSPAC

SPAC Deep Dive

Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.

Equity Bottom-Up

<ul><li>The last week of SPACs was packed with buyouts, IPOs, and deal amendments.</li><li>A co-working spaces provider gets a lifeline with a restructuring deal with its creditors, while a SPAC terminates a deal with a group of companies.</li><li>Also, two new IPOs are announced, including one from serial sponsor Michael Klein after a three-year hiatus. Read on to find out the latest about all things SPACs. </li></ul>

The last week of SPACs was packed with buyouts, IPOs, and deal amendments.A co-working spaces provider gets a lifeline with a restructuring deal with its creditors, while a SPAC terminates a deal with a group of companies.Also, two new IPOs are announced, including one from serial sponsor Michael Klein after a three-year hiatus. Read on to find out the latest about all things SPACs. 

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

It's official: <a href="https://www.smartkarma.com/entities/the-we-company-wework" target="_blank" data-smartkarma-citation="entities:28061:1" rel="noopener">The We Company (WeWork) (WE US)</a> has decided to <a href="https://www.bloomberg.com/news/articles/2019-09-16/wework-is-said-to-likely-delay-ipo-after-valuation-plummets" target="_blank" rel="noopener">pull its IPO for now, but still expects to complete it by yearend.</a>Don't hold your breath.This comes just days after WeWork <a href="https://www.businessinsider.com/the-we-company-ipo-wework-confirms-nasdaq-listing-governance-changes-2019-9?utm_source=notification&amp;utm_medium=referral" target="_blank" rel="noopener">filed an amended S-1</a> announcing plans to list its new shares on the Nasdaq index even as its IPO valuation continues to dissolve. Reuters had reported on Friday that deal insiders were considering an implied equity valuation of <a href="https://www.reuters.com/article/us-wework-ipo-valuation-exclusive-idUSKCN1VY1PB" target="_blank" rel="noopener">just $10-12 billion,</a> a stunning 78% drop versus the extravagant $47 billion floated since January. My analysis shows even $10 billion is too high.So it's not surprising that long-term backer and top investor <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>, arguably the most responsible for WeWork's incredible equity valuations, had <a href="https://www.ft.com/content/111f8e00-d346-11e9-8367-807ebd53ab77" target="_blank" rel="noopener">urged the company to scuttle the IPO</a> given the "cool reception" it's been getting.Yet WeWork is compelled to push on regardless, seemingly <a href="https://www.ft.com/content/f28474a2-d57e-11e9-a0bd-ab8ec6435630" target="_blank" rel="noopener">ready to concede to any terms</a>to get a deal done, because its financial condition is much more fragile than it has been trying to project. It has little time to waste and few alternatives.That means Plan B must already be in the works.Either way, risk has intensified for WeWork's overpriced bonds.Read on for Bond Angle analysis: How did WeWork get so expensive and What's next? Plus a new WeWork model, equity valuation and forecast, and more.

It's official: The We Company (WeWork) (WE US) has decided to pull its IPO for now, but still expects to complete it by yearend.Don't hold your breath.This comes just days after WeWork filed an amended S-1 announcing plans to list its new shares on the Nasdaq index even as its IPO valuation continues to dissolve. Reuters had reported on Friday that deal insiders were considering an implied equity valuation of just $10-12 billion, a stunning 78% drop versus the extravagant $47 billion floated since January. My analysis shows even $10 billion is too high.So it's not surprising that long-term backer and top investor Softbank Corp (9434 JP), arguably the most responsible for WeWork's incredible equity valuations, had urged the company to scuttle the IPO given the "cool reception" it's been getting.Yet WeWork is compelled to push on regardless, seemingly ready to concede to any termsto get a deal done, because its financial condition is much more fragile than it has been trying to project. It has little time to waste and few alternatives.That means Plan B must already be in the works.Either way, risk has intensified for WeWork's overpriced bonds.Read on for Bond Angle analysis: How did WeWork get so expensive and What's next? Plus a new WeWork model, equity valuation and forecast, and more.

Gravity Works As WeWork Doesn't; Now Plan B

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week</li>
<li>The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs</li>
<li>Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR</li>
</ul>


Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week
The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs
Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR


Softbank Group - Semiconductor Weakness Expands Discount

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>SoftBank group’s headline NAV discount is over 50%, factoring in the T-Mobile shares windfall at December-end</li>
<li>SoftBank Corp is looking to IPO digital payments company PayPay, which should also be a positive driver for SoftBank Group shares going forward, but only a marginal one</li>
<li>Arm shares have been defying gravity, but we see downside risk going forward, as well as questions over SVF1 and SVF2 private company valuations; and the threat of JPY appreciation</li>
</ul>


SoftBank group’s headline NAV discount is over 50%, factoring in the T-Mobile shares windfall at December-end
SoftBank Corp is looking to IPO digital payments company PayPay, which should also be a positive driver for SoftBank Group shares going forward, but only a marginal one
Arm shares have been defying gravity, but we see downside risk going forward, as well as questions over SVF1 and SVF2 private company valuations; and the threat of JPY appreciation


Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

Energy Transition | AI | Shifting World Order, Mint Finance

Suhas Reddy

Energy Transition | AI | Shifting World Order

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Thematic (Sector/Industry)

<ul>
<li>Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.</li>
<li>Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.</li>
<li>Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.</li>
</ul>


Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.
Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.
Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.


Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

United States

WeWork Inc. provides co-working spaces for individuals and entrepreneurs. The Company offers private offices, office suites, headquarters, and custom build out options to fit a variety of office needs, as well as desk spaces and conference rooms. WeWork serves customers worldwide.

WeWork (WEWKQ US)

Rebooting WeWork

A co-working spaces provider gets a lifeline with a restructuring deal with its creditors, while a SPAC terminates a deal with a group of companies.

subSPAC

Gravity Works As WeWork Doesn't; Now Plan B

WSJ reports that WeWork will file bankruptcy next week, pending ongoing discussions with its beleaguered creditors. Surprised? You shouldn't be....

Vicki Bryan

Softbank Group - Semiconductor Weakness Expands Discount

The discount to fair value has expanded by 4pp in a week as tech weakness not only reduces net asset value but also raises concerns on an IPO of...

Kirk Boodry

Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...

Victor Galliano

Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

US CRE shows bleak prospects for 2024 due to structural demand decline for office space. CRE loan delinquency on the rise for five sequential...

Mint Finance

Rebooting WeWork

A co-working spaces provider gets a lifeline with a restructuring deal with its creditors, while a SPAC terminates a deal with a group of companies.

subSPAC

Gravity Works As WeWork Doesn't; Now Plan B

WSJ reports that WeWork will file bankruptcy next week, pending ongoing discussions with its beleaguered creditors. Surprised? You shouldn't be....

Vicki Bryan

Softbank Group - Semiconductor Weakness Expands Discount

The discount to fair value has expanded by 4pp in a week as tech weakness not only reduces net asset value but also raises concerns on an IPO of...

Kirk Boodry

Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

​SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...

Victor Galliano

Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

US CRE shows bleak prospects for 2024 due to structural demand decline for office space. CRE loan delinquency on the rise for five sequential...

Mint Finance

SoftBank group's NAV discount is 50%+, post T-Mobile shares windfall. PayPay IPO may boost SoftBank shares a bit but JPY strength detracts, Arm...