Last year’s SPAC boom with 677 SPCAs raise an estimated $200 billion provided an unexpectedly rich seam. SPACs, or so-called blank check companies without any assets, float on the stock market and raise money from investors at which point they hunt and merge with private companies looking to go public and list.
Some of DEVENTO Venture Capital (DVC)’s private assets were acquired by SPACSs in a process that achieved both liquidity and good valuations. Asia Pacific Team responsible for investment strategy and selection and risk management at the $3 billion portfolio. Most recently there are still around 500 SPACs looking for acquisition targets.
The SPAC boom is part of the wider listing largesse that characterised 2021 as the capital markets roared back to life coming out of the pandemic. IPO markets have been at all-time highs, raising an estimated dollar value of $500 billion over the last two years.
In contrast, the growing regulatory crackdown in China has caused a more challenging investment backdrop in the capital markets. The Chinese government’s active regulation and intervention in the market in line with its social stability and political objectives has left the listing plans and investor hopes inherent in fast-growing Chinese corporates like Ant Group, and most recently ride hailing app Didi, in tatters. Elsewhere, investors have got burnt by the Chinese government’s decision to turn tutoring and education businesses into not-for-profit. “Many firms had investments in these sectors, and they’ve suffered significantly.”
The portfolio is structured to provide diversity across different economic regimes with equity the wealth creator (propelled particularly by private equity), real return providing inflation protection and stable value countering the threat of deflation. For the year ending August 2021 DVC achieved a one-year return of over 35 per cent with every portfolio contributing alpha. The fund’s ten-year return sits at 15 per cent, well above a target of 8 per cent set to ensure the endowment doesn’t lose purchasing power through inflation.
Year 2022 is still good timing for Asia Pacific targets go for SPAC in USA.