Singapore's Vistas Media Capital lists US$100m Spac on Nasdaq

Singapore

SINGAPORE-BASED Vistas Media Capital (VMC) has raised US$100 million through the listing of a special purpose acquisition company (Spac) to acquire media and entertainment businesses, in hopes of capturing the growing interest in blank-cheque vehicles among investors.

Vistas Media Acquisition Company (VMAC) on Monday commenced trading on the Nasdaq stock exchange, and will be looking at tech-based media businesses valued around US$300 to US$600 million to effect a merger, share exchange, asset acquisition, share purchase, or a combination of these.

Once it has identified a target company, the Spac can look towards investors to raise the remaining funds for the transaction.

The companies it is looking for - in terms of size and scale - are mostly based in North America, Canada and parts of Europe, VMC's co-founder Abhayanand Singh told The Business Times.

These companies would have elements of technology in their businesses and also hold significant intellectual property. Examples would include those in e-sports or those that have visual effects components. These attributes would allow the companies to "grow quickly in a post pandemic world", and would benefit from an injection of capital.

VMAC's founders predict the next phase of growth for the media industry would come from the likes of emerging markets such as India, South Korea and China.

As such, they aim to further expand the merged entity by establishing its presence in the different markets across Asia.

"Our plans contribute to the longevity of the merged entity, which was what differentiated us from other Spacs in the space," said VMC's other co-founder Saurabh Gupta.

Spacs raise money from investors to acquire private companies and take them public, usually within a two-year timeframe. If the sponsors of a Spac fail to do that, the Spac is dissolved and the money returned to shareholders.

These vehicles have recently seen a surge in popularity, as companies increasingly seek an alternative route to public markets. Spacs have raised US$33.9 billion so far this year, already eclipsing last year's US$15.9 billion by 113 per cent, according to data from Bloomberg.

Blank cheque companies now account for about one in four dollars raised in initial public offerings - about four times the share of last year.

Mr Gupta, a former banker who now runs a venture investment firm, suggested that many investors - ranging from high net-worth individuals to private equity firms - are looking at Spacs as a way to diversify their portfolios given the weak outlook for many other assets just now.

Investors could also be more open to Spacs in the current climate as they present a safer and more viable alternative to the volatile US stock markets, said S Sivanesan, a senior partner and head of law firm Dentons Rodyk's corporate practice.

"With a credible sponsor who has a proven track record, investors can hedge their bets with Spacs - since their principal amount would still be secure."

Investing in Spacs does mean that investors have to place their trust in the sponsor's dealmaking prowess, without any visibility into potential target companies.

As such, Drew and Napier's head of capital markets Grace Lai said that sponsors that have demonstrated a track record with the proposed investment strategy and/or have their own network of investors that are prepared to back them will be more likely to attract investments.

In VMC's case, co-founders Mr Gupta and Mr Singh have multiple years of experience in the industry.

Over the last five years, Mr Gupta's media investments firm M! Capital Ventures has successfully invested into Bollywood and Hollywood films.

Mr Singh, meanwhile, was previously managing director of Pinnacle Fund Management. Both co-founders will sit on VMAC's board.

Jacob Cherian - who had previously headed two other Nasdaq-listed Spacs - is helming VMAC as its chief executive. Also on VMAC's board are listings and capital markets adviser Mark Iyeki and American film producer Ben Waisbren.

Having a Singapore-based sponsor has helped enhance the Spac's credibility and attractiveness, Mr Gupta told BT, as the city-state is well-known for its robust intellectual property framework and financial stability.

Singapore's strategic location also allows the merged entity access to the biggest markets for growth in media entertainment such as China, India, South Korea and South-east Asia, added Mr Gupta.

"More than ever, there is a good possibility that we can come across strong businesses at attractive valuations. The pandemic brings about new opportunities as these businesses are striving for cash in the current climate," added Mr Gupta.

VMAC's shares, which were sold at US$10 each at the IPO, closed at US$9.98 on Wednesday.