Longevity’s vote on the 4D deal is likely in the coming weeks, and the signs are encouraging: the Spac’s stock has advanced 20% since the deal was announced. The Spac’s shareholders can chose to stay on the register post-merger or ask for their money back – the level of redemptions is another big indicator of investor support. People can trade and you get more exposure on the market,” he says. “You get to understand how the company will be received on the stock market. A Spac’s shares are already trading, so holders can react to any proposed acquisition while the deal is being closed. The ability to gauge investor reaction throughout the process was another big attraction for Mr Peyton. 4D’s market cap stands at £185m ($258m) ADSs will be listed on Nasdaq after the Longevity deal is done, with the Aim shares continuing to trade. With a listing on Aim – London's low-regulated market for small companies – 4D is not your typical Spac target. “When we started the process Covid-19 had struck, the UK market wasn’t particularly strong, and our market cap meant banks would not have been interested in taking us on the road to do a traditional IPO.” This is exactly what attracted 4D Pharma, Mr Peyton tells Evaluate Vantage.įloating via Spac “is an efficient process, and you know what you’re going to end up with”, he says. The Spac’s investors gain access to a promising new stock, the Spac's shares hopefully rise, and the target takes over the stock market listing and bank balance.īecause two crucial elements are already in place – listing and cash – these vehicles are considered a faster and less risky way to go public than a traditional IPO. Spacs are shell companies that raise money through an IPO and then seek to buy an established business. Assuming all goes well 4D’s Nasdaq listing should be up and running next month, according to the company’s chief executive, Duncan Peyton, who says further funds could be raised at the same time. Showing the way is the microbiome researcher 4D Pharma, which struck a deal with a Spac called Longevity last October. A new route across the Atlantic is now emerging for these firms, thanks to the recent boom in Spacs, or special-purpose acquisition companies. Young UK drug developers seeking expansion capital have grappled with the limitations of London’s stock market for years, forcing many to list in the more biotech-friendly US.
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