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Fat Projects SPAC eyes merger with RI start-ups
The Singapore-based special purpose acquisition company is looking for start-ups that can be “successful” in Indonesia and expand in the region.
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ingapore-based investment and venture firm Fat Projects Acquisition Corp. aims to launch a special purpose acquisition company (SPAC) to merge with Southeast Asian start-ups after its initial public offering (IPO) in the United States this year.
The firm’s chief operating officer, Nils Michaelis, said his team was looking for start-ups that could make it big in Indonesia. He likened Southeast Asia’s largest economy to a training ground for budding companies.
“If you can be successful in Indonesia, it is a lot easier to grow to smaller countries,” he told The Jakarta Post in an interview on Aug. 26.
Michaelis went on to say that Fat Projects would launch its SPAC on Nasdaq by the end of the year and that the company would then acquire, merge with or combine with tech-led businesses in the region.
He added that the firm was looking to raise US$100 million to $150 million from the IPO.
“The pandemic has a positive impact in the sense that it has shown what industries are even riper for growth and [able to face] disruption,” he said.
Meanwhile, Fat Projects senior advisor Shinta Dhanuwardoyo said Fat Projects was looking for companies that did well amid the pandemic, such as e-commerce, health tech or edutech firms.
“We are looking at companies that could thrive before and after the pandemic,” she said. “We also look at companies that can also roll out in the region. So, it may start in Indonesia, but we want it to grow in the region as well.”
A SPAC is a blank check company that raises money through an IPO for the sole purpose of merging with or acquiring another firm. Because SPACs have no fundamental operations, they can undergo due diligence procedures faster than regular companies and therefore allow the target company to be listed sooner.
SPACs usually have around two years to acquire a company before they are liquidated and the IPO proceeds are returned to the shareholders.
SPACs have become increasingly popular over the years, and stock markets in Asia, including Indonesia, have plans to allow public listing through such vehicles.
Read also: IDX to allow SPACs, hopes Indonesian unicorns will go public locally
Global gross proceeds raised by SPACs reached $104 billion in the first half of this year. The number reflects an almost tenfold increase from $11 billion over the same period in 2020, according to S&P Global market intelligence.
Michaelis said SPACs were a more effective way to exit from start-ups and medium companies than traditional IPOs, as the former had already prepared 70 to 80 percent of the IPO process, such as due diligence and compliance work.
“A SPAC is just easier and faster than a regular IPO. It will probably attract more companies in the future,” Shinta added.
