Online trading platform Webull said on Wednesday it has agreed to list its shares on the Nasdaq via a merger with a blank-check firm, which values the combined company at $7.3 billion.
The deal with SK Growth Opportunities marks a rare multi-billion dollar merger in the blank-check market, which has been under pressure due to concerns from regulators and investors.
Special purpose acquisition companies (SPACs), also known as blank-check firms, use capital raised from an initial public offering to merge with a private company. It allows private firms to sidestep a lengthy IPO process to list their shares.
“The traditional IPO path has many hurdles that we’ve encountered over the years,” Webull’s Group President Anthony Denier said, citing the possibility of the company being valued against peers that are not direct competitors.
Going public via a SPAC merger would allow the market to dictate the proper valuation of the company instead of it being determined by underwriters, which “aligns with Webull’s core values of democratization,” Denier added.
A hallmark of pandemic-era dealmaking, SPACs have fallen out of favor in recent years following intense scrutiny from the U.S. securities regulator.
The De-SPAC index, which tracks a basket of companies that are listed through such deals, is down roughly 13% so far this year and has lost about 34% over the past six months.
SPAC investors have the right to redeem their shares in the company if they do not approve of the merger target. Such redemptions can leave the combined company with less-than-expected cash in hand and have been a major concern for companies involved in SPAC deals in recent years.
Webull offers commission-free trading for stocks, equity options and exchange-traded funds. It caters to a more experienced retail investor cohort compared to some of its peers, Denier said.
Such online brokerages have been gaining ground in the past few months as increasing hopes of a soft landing for the economy encourage retail investors to restart trading, following a period of muted activity due to the U.S. Federal Reserve’s quantitative tightening.
Webull launched in the U.S. in 2018 and has since expanded to Asia Pacific, Europe and Latin America. The company said its current shareholders are expected to maintain their holdings in the combined company after the deal.
Following the deal, which is expected to close in the second half of this year, Webull’s shares will list on Nasdaq under a new ticker symbol.
Source: Reuters.com