Exploring SPACs and IPO Trends: CAMPEA Research Director Featured on CNBC Africa

London 24 June 2021 – CNBC Africa Hosts CAMPEA Head of Research on the Future of SPACs and Listings. We are pleased to report that Dr Daniele D’ Alvia, CAMPEA Research Leadership and financial markets expert, was spotlighted on PowerLunch, CNBC Africa’s emblematic capital markets segment, to discuss Special Purpose Acquisitions Companies mechanisms.

Watch the integrality of the interview here:Is Africa ready to SPAC-off? – CNBC Africa

SPACs present a disruptive financial innovation, reshaping traditional capital-raising methods globally.
African Gold Acquisition Corporations’ success highlights the potential of SPACs to drive investment in unconventional sectors.
SPACs offer an alternative approach to private equity, focusing on equity-based securities and democratizing investment opportunities.

The Special Purpose Acquisition Companies (SPAC) have emerged as a compelling alternative for companies seeking a simplified pathway to public listings through initial public offerings. With the rise of SPACs in the financial market, businesses are exploring new avenues to attract capital, including on the African continent. The CEO of Spark Consultancy and the Research Director for the Central African Markets, Private Equity Association, Daniel Dalvia, sheds light on the evolving landscape of SPACs and their impact on investments in Africa.

Dalvia highlights the disruptive nature of SPACs as a Greek financial innovation that has gained traction globally. In 2020, there were over 240 SPAC offerings in the US, raising a total of 83 billion, followed by 98 billion in the first quarter of 2021. This surge in SPAC activity signifies a shift towards alternative capital-raising methods in financial markets.

One key success story in Africa is the African Gold Acquisition Corporations, the continent’s first SPAC, which raised over 300 million on the New York Stock Exchange. This milestone underscores the potential for SPACs to drive investment in sectors traditionally underserved by conventional funding sources. Moreover, the expanding venture capital financing for tech firms in Africa, reaching two billion, reflects the continent’s growing innovation ecosystem and investment opportunities.

While SPACs share similarities with private equity, Dalvia distinguishes them by highlighting their equity-based securities, contrasting with the debt financing often associated with traditional private equity deals. This distinction positions SPACs as an alternative avenue for private equity transactions, offering investors a different approach to funding acquisitions and driving growth.

In terms of investment strategies, SPACs primarily focus on taking private companies public, facilitating the transition from private ownership to public trading. Additionally, SPACs serve as a bridge for retail investors to participate in funding innovative ventures, democratizing access to capital for promising startups. Furthermore, SPACs can play a role in capital restructuring efforts, supporting companies in need of financial resources to revamp their operations and drive future growth.

The typical deal size for SPACs varies across regions, with the US averaging around 300 million USD per deal. However, there is a growing trend in Europe towards smaller deal sizes, such as 50 million to 100 million, leading regulators to consider ‘mini-SPACs’ as a means to enhance capital accessibility and encourage investment at varying scales.

As SPACs continue to gain prominence globally, their impact on African markets presents opportunities for businesses to access alternative funding mechanisms and drive innovation across various sectors. The evolving dynamics of SPACs underscore the shifting landscape of capital markets and the potential for SPACs to fuel economic growth and entrepreneurship in Africa.