The JSE comes in for a lot of criticism around its lack of innovation but the introduction of the SPAC (Special Purpose Acquisition Company) vehicles has arguably been one of the best tools for bringing capital to high-growth businesses in sectors which are typically under-represented on the JSE.
These sectors include energy, healthcare and technology.
Simplistically a SPAC allows a team of people to get together and list a clean shell business on the JSE. They will typically use their deal-making skills and network to convince investors that they can deliver superior returns if they are rewarded with capital. The management team then have 2 years in which to identify “Viable Assets” and convert into actual operating businesses.
Should management not be able to find viable assets, they are required to return the capital to investors. Two examples of this happening since the JSE introduced SPACs are Sacoven and m-Fitec.
Due to the speculative nature of SPACs, they have presented something of a mixed bag with many only now starting to report actual operating revenues and giving investors a first real look at the deal-making ability of management.
As the table below demonstrates, liquidity amongst the SPACs remains low as investors wait for clarity earnings. The average daily volume ranges from 1.47m for Capital Appreciation down to just 115 shares daily on RH Bophelo.
Here is a summary of the SPACs currently listed on the JSE
|Company||Sector||Market Capitalisation||30-day average volume||Price to earnings multiple||Dividend Yield|
|Capital Appreciation||Information Technology||R1,47bn||1.47m||10||4.2%|
|GAIA Infrastructure||Energy / Infrastructure||R330m||40 484||8.8||14.72%|
|Hulisani||Renewable energy||R639m||36 229||-5.47||0%|
|Renergen||Alternative energy||R822m||17 549||-26||0%|