Fintechs test the public market
Roxe Holdings, a blockchain-based payments company, announced plans on Tuesday to go public via a SPAC merger with Goldenstone Acquisition.
Why it matters: Roxe isn't the only fintech company soldiering into the public markets despite the volatility. Whether that's a good call is a different question entirely.
Catch up fast: The SPAC boom of the pandemic era imploded into a spac-tacular bust as the market soured on startups yet to show a profit and far-flung moonshot bets. Companies broke up with their SPACs and sought out private investors. IPOs, meanwhile, died down in tandem.
But this week Pagaya, an Israeli payments startup, is set to go through with a SPAC merger that should have it listed on the Nasdaq.
- And Inter, a Brazilian banking company, is planning to move its listing onto the Nasdaq on Thursday. The Softbank-backed business is seeking to expand its operations to the U.S.
- Roxe and Goldenstone's deal is expected to close later — sometime in Q1 of 2023, dependent on approval from shareholders and from regulators — although it's still closing at an uncertain time for the overall market.
Of note: Pandemic-era SPAC sponsors often touted their list of PIPE investors — a starry roster that usually included crossover funds, growth investors, or the Fidelities of the world — as a reason for market watchers to feel confident in the business.
- Roxe Holdings' announcement makes no mention of a PIPE. That's not to say it can't make that announcement later down the line — but that's something that has yet to come together.
Meanwhile, Pagaya's deal saw a rare situation play out:
- Barclays, which was advising on the merger with EJF Acquisition Corp., walked away from the deal just days before shareholders put it up for a vote, giving up the fees that would've usually come with its position.
- In return, the bank "disclaimed any responsibility for the Registration Statement."
- This all comes as EJF Acquisition Corp. is trading roughly 40% below its 2021 opening price, and as Wall Street banks generally have been pulling back and out of SPACs over liability concerns.
The bottom line: Public markets aren't dead. They're just really painful.