Frankfurt Successful start for the first German stock market shell in more than a decade: The price of the company Lakestar Spac I SE started on Monday morning at over eleven euros and in midday trading is 11.20 euros. The offer price was ten euros.
The prominent investor Klaus Hommels brought the US-style Spac process to Germany. The abbreviation stands for “Special Purpose Acquisition Company” and describes a shell company that first collects capital through an IPO in order to then invest the money in the takeover of a company that has not yet been identified. Units are issued that consist of one share and one third of a warrant.
The private placement comprises up to 27.5 million units. Before the first day of trading, the units were exclusively offered to institutional investors. The company is based in Luxembourg, but it was listed in Frankfurt.
Lakestar is the first Spac company with a tech focus in Europe, founded with the aim of taking over a European growth company in the technology sector, the company announced before the first day of trading. In financial circles it was said that one was looking for takeover targets in the fields of technology, fintech, healthtech and consumer tech.
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Company founder and Chairman Hommels is a well-known venture financier. The European tech sector offers “attractive investment opportunities with promising valuations and many excellent growth companies,” he said in advance. Compared to other areas, investing in the technology industry in the past would have provided excellent returns.
More than 220 Spac listings in 2020 in the USA
The demand for a private placement for institutional investors was so great before the first day of trading that some investors received much less allotment than they had expected. The oversubscription was about nine times the offer – that’s considered a good value.
The investors were predominantly hedge funds, long-term investors (long only), family offices and private banks. A good 28 percent of the awards go to institutional investors in Great Britain, a good 23 percent to the USA, just under 19 percent to Germany and 14 percent to Switzerland. The rest is spread across Hong Kong and other places. According to observers, the allocation shows that there is a lack of large asset managers in Germany who can also record the material. The gap between the assets under management of the Anglo-Saxon fund companies and the German and European addresses is growing, said an industry observer.
This is how a US spac works
According to the analysis house Pitchbook, there were more than 220 Spac listings in the United States last year. The excessive activity there will inevitably lead to more such transactions in Europe, according to an outlook for 2021.
Several stock exchanges and supervisory authorities competed to create the best framework conditions. This also includes the London Stock Exchange (LSE), which is looking for new growth fields after the UK left the EU with Brexit. Also the German Stock Exchange in Frankfurt wants to get involved.
According to Hommels, observers expect further investors with Spacs, for example in Frankfurt. According to media reports, ex-Commerzbank boss Martin Blessing is also working on a Spac, as is ex-top manager Tidjane Thiam from the major Swiss bank Swiss credit.
More: Spacs simply explained – How the stock market trend from the USA works