SPAC in Cloud: a new path to listing, for the digital age.
SPAC in CLOUD, the result of a year-long collaboration between ELITE and Electa Ventures, offers a streamlined route to the public markets
The ELITE Funding platform was launched in February 2017. It supports small and medium sized enterprises seeking capital raising and financing to connect with professional investors. To date, €300 million of investment has been made by investors into fifteen companies who have used the ELITE Funding platform to connect with SMEs seeking capital.
Working with the independent advisory network Electa Ventures, LSEG’s ELITE Funding platform has streamlined the Special Purpose Acquisition Companies (SPACs) process via its SPAC in CLOUD offering. SPAC in CLOUD combines the advantages of the established SPAC model with the speed and agility of a digital fundraising platform.
As an asset class, SPACs present compelling risk–reward opportunities for investors. For entrepreneurs, they offer a streamlined, cost-effective route to market. Over the past decade, they have become increasingly significant in the European market – in Italy alone, they have accounted for in excess of €3 billion in funding.
“SPAC in CLOUD is the result of innovation based on our pioneering experience in SPACs,” explains Electa Ventures CEO Simone Strocchi. “It came about through a strategic decision to invest in evolving the SPAC model to reduce structural complications in terms of execution, time and costs, while enhancing the positive aspects of what was becoming a traditional route to a listing.”
Online and streamlined
As an environment dedicated to fundraising for companies with ambitions to become listed on a public market, SPAC in CLOUD offers significant advantages for entrepreneurs and investors alike. Among its key benefits are simplicity, reduction of costs, radically shorter time-to-market, and access to a worldwide, connected community of players. Being platform-based, it avoids the necessity to create a SPAC in the first place, making execution faster and simpler.
The process begins with a promoter – usually an ELITE Partner – identifying a target company and selecting a cornerstone investor, which will commit to a minimum of 20% investment of the fundraise. The role of the promoter is a key aspect of SPAC in CLOUD: rather than earning a fee, they invest into special securities issued by the company to support its listing process, and their return is based solely on the performance of the company’s shares on the market. All binding agreements negotiated by the promoter with the target company are incorporated into the investment proposal, which is uploaded on the ELITE Funding platform and opened to follow-on investors, who can access a complete data room and subscribe to a dedicated set of securities.
Specifically, each of the three groups of investors receives an entitlement to a different security set. Promoters – the first to invest – subscribe ‘offline’ to special shares issued by the company to finance its listing process. Follow-on investors, representing the first book, invest in the company’s ordinary shares and warrants, pre-booking their interest through the ELITE Funding platform. The cornerstone investor has a dual interest, committing to a proportion of the investment in the IPO and receiving an entitlement to an equal percentage of the special shares once these are issued.
All investors’ engagement and the transaction execution are subject to the target’s admission to a public market.
Digital success story
The IT services and solutions company Digital Value became the first company to be successfully listed through SPAC in CLOUD on 8 November 2018. Electa Ventures were the promoters of the transaction; the cornerstone investor, IPO Club – a closed-end fund dedicated to pre-IPO opportunities – subscribed to 30% of the total offer; and a number of follow-on investors joined the proposal and completed the book through the ELITE funding platform.
“We don’t know who will negotiate and carry out the next listing through SPAC in CLOUD,” Simone says, “but we are confident it will be another growing company. What we can confirm, from the user point of view, is that SPAC in CLOUD really simplified the fundraising process.”
And the ELITE Funding platform is set to be further enhanced in future, with new online tools and a professional helpdesk to support the growing number of promoters and cornerstone investors interested in taking advantage of this new way to bridge the gap to public markets.
“Europe has one of the world’s most buoyant SPAC markets and is home to a wide range of global SMEs,” concludes Simone. “This project is the result of a year of collaboration with our partners at ELITE. We are proud to have identified a flawless combination of our synergic competences to transform an innovative investment approach into a turnkey scheme with defined roles, accessible to any skilled player interested in becoming a promoter, cornerstone investor or follow-on investor within this secure and powerful digital environment.”
The platform provided by Elite to assist Elite companies in meeting their funding needs is operated by Elite Club Deal Limited. Issued by Elite Club Deal Limited, The London Stock Exchange, 10 Paternoster Square, London EC4M 7LS. Authorised and regulated by the Financial Conduct Authority (FRN 761002) . Incorporated in England No. 10274181. If contemplating an investment service, potential customers must seek independent advice or make his/her own decisions as to the suitability of the service. Potential investors should take their own independent advice to assess the suitability of investments.