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Market Monitor SPACs to the fore
“ When you think about SPACs on their own , there is a huge amount of liquidity in the public markets because of the current low interest rate regime and people are looking at high growth assets generally ”
MATT DAVEY , TEKKORP says . “ You see that in DraftKings , in particular . There is a belief they will block out a chunk of the market . So , the variance between the price now and the price in a few years is very big .”
PRICING IN THE US STORY
The prospects of investor interest
in the US clearly piques interest in the European gaming sector which , as is discussed later , is relatively starved of investor interest at present . Certainly , when it comes to multiples , there is evidence in the listed sector of a wide disparity in the multiples being achieved by US gaming and betting companies and those on the European side .
It helps explain , for instance , the plans being laid by Flutter to look at floating its FanDuel business in the US to cash in on the Stateside enthusiasm and achieve a higher valuation for the business than could be achieved now in the UK .
This essentially opportunistic play is being replicated down the corporate ladder and is perhaps typified by the Genius Sports float , where a loss-making European- based business has managed to parlay its interest in US sports data rights into a more than $ 1.5bn float via a SPAC .
“ There is an element that everyone has to dance at the moment ,” says Loudon . “ Every time there is a SPAC , it spawns more activity . These businesses now have to do deals .” There is , he says , “ huge enthusiasm ” for gamingrelated M & A and “ full prices are being paid for good assets .”
“ That said , I think it is sustainable M & A – companies are a lot more active ; they are moving faster , and everyone is competing so it is easier to get prices away at higher prices . Everybody ’ s leaning in .”
The backdrop in the US , meanwhile , provides further encouragement . “ I don ’ t see an end in the near future – you still have so many states that are going to open up ,” says Loudon . “ I can ’ t see within the next few years anything meaningfully challenging the enthusiasm for gaming and the momentum behind the whole opening-up process .”
Still , David McLeish , corporate lawyer at Wiggin , warns that for
European businesses looking over the pond for a higher valuation for their business , “ there has to be a US story ”.
SPACS OUTSIDE THE US ?
Where there is no US story , however , the options for SPACs outside the US are fairly limited . While they are currently also possible in Amsterdam and in Singapore , although blank cheque companies are possible in the UK , there are issues around the need to suspend shares ahead of any transaction .
This makes them relatively unattractive , according to the capital markets legal team at Bird & Bird : “ The main deterrent to SPACs listing on the London markets ( and this applies to AIM as well as the main market ) is the requirement for the shares in the SPAC to be suspended as soon as a deal is announced to the market . This could leave investors locked into the stock for a long period of time without the ability to trade while the SPAC is preparing a new listing document to relist the enlarged group .” iGB Market Monitor