SoftBank has just been filed for a $ 525 million SPAC IPO. Here’s why.

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An affiliate of SoftBank and its Vision Fund has filed a lawsuit to raise $ 525 million in an offer from the company with a blank check. The Special Purchasing Company or SPAC also includes a commitment from SoftBank affiliates to put an additional hundreds of millions of dollars into a possible transaction. It’s just a surprise that Masayoshi Son’s SoftBank took so long to enter the world of SPACs during a year of deployment for structures.

SPACs raise money from investors in an initial public offering in order to identify and merge with a company that operates, usually within two years. SoftBank (ticker: 9984. Japan), called SVF Investment, intends to target companies in a similar way to its venture capital giant Vision Fund. Its IPO filing with the Securities and Exchange Commission on Monday includes “disruptor”, “visionary founders” and “great market opportunities” as procurement criteria.

The prospectus states that SoftBank has investments and relationships with over 100 growing companies around the world and that some of them may be attractive targets for its SPAC. The general director of SPAC will be Rajeev Misra, the chief

SoftbankS

the investment unit and the Vision Fund.

“We intersected with many convincing companies that wanted our support for the IPO and not only, but we did not lack the vehicle to associate,” reads the IPO submission of SVF Investment. “This trend has only increased in the last year, because several companies have decided to make a public list. Our SPAC will link SoftBank’s private and public investment strategies, allowing us to partner with a fast-growing, IPO-ready technology company. “

Some start-ups that the Vision Fund has invested in – such as

Open door

(OPEN) – became public this year through SPACs this year, while others – appreciate

De Dash

(DASH) – followed the traditional IPO route.

Sponsoring a SPAC would allow SoftBank to diversify its funding sources. The Japanese telecommunications company that has become an investment firm has been in disinvestment mode lately, offering its stake in the wireless company

T-Mobile USA (TMUS)

and Arm chip designer, plus other assets. SoftBank used this revenue to buy shares and pay off debts and also discussed moving to private.

SVF Investment will debut on the Nasdaq stock exchange by selling $ 10 under the symbol “SVFAU”. These will consist of a joint action and a quarter mandate – essentially a call option – which can be exercised at $ 11.50 after the potential merger of the SPAC. Within a few months of the IPO, the SVF Investment units will be divided, and the shares and mandates will be able to be traded separately under the “SVFA” and “SVFAW” checkboxes, respectively.

The $ 525 million, 52.5 million units offer includes a global subscription option for another 7.9 million units, which could bring SPAC’s total IPO to $ 604 million. The common managers of the offer are

City Group,

Deutsche Bank Securities and Cantor.

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SoftBank affiliates also pledged to purchase up to another 300 million units at the time of the potential closure of the merger. The SVF investment could have a weapon of war of about $ 900 million to make a transaction.

As is typical in SPAC transactions, SVF Investment sponsors receive shares equal to approximately 20% of its total for a negligible amount. SoftBank affiliates also pledged to purchase another 8.3 million to 9.4 million mandates for $ 1.50 each in a private placement, depending on the size of the IPO. This means that sponsors will benefit more from the advantage of a well-received transaction, but could create a greater dilution for other shareholders.

It was a record year for SPACs. The previously obscure vehicles raised $ 81 billion in 243 IPOs in 2020, according to SPAC Insider. This is almost double the funds raised by SPACs in the previous decade combined and there are currently almost 50 other IPO files. They brought to the public dozens of notable companies, including many of the strongest electric vehicle stocks of the year:

Nikola

(NKLA)

Hyliion

(HYLN) and

QuantumScape

(QS) have all merged with SPACs this year. He did the same

DraftKings

(DKNG)

Multiplane

(MPLN) and many more.

Write to Nicholas Jasinski at [email protected]