Investment and saving app, Acorns is planning to go public by merging with SPAC Pioneer merger. Fintech unicorn Stash is also considering options for a public offering and may choose to marge with SPAC. There is a growing trend among tech start ups that are choosing to go public via SPAC mergers instead of traditional IPOs.
What is a SPAC?
SPAC is an acronym for Special Purpose Acquisition company. SPACs are shell companies that have not business plan or model of their own. The company is set up by investors with the sole purchase of going public via an IPO and raising money with the intent of eventually acquiring another company. In this way, a start-up does not have to make a public offering, when it merges with a SPAC the combined company will already be listed. SPACs are also known as blank-check companies and have been around since the 90s. They had a very poor reputation and were not considered a good way of going public. Recently, SPACs have been making a comeback and are becoming a legitimate choice for start-ups looking to go public. Virgin Galactic, Draftkings, and Opendoor are some examples of companies that chose to go public by merging with a blank-check company.
Acorns merger with PIoneer Merger
Launched in 2014, Acorns is a platform that allows its customers to set aside and invest small amounts of money in exchange-traded funds offered by asset managers like Vanguard and BlackRock. The company has 4 million subscribers, which it hopes to increase to 10 million by 2025. So far Acorns has raised $207 million in investments from investors like PayPal, DST Global, Rakuten, and others. Acorns will be going public by merging with the blank-check company Pioneer Merger and will trade publicly by the second half of the year. For the deal Acorns was valued at $2.2 billion. Once the deal is completed, Acorns will have $450 million on its balance sheet. It will trade on the Nasdaq under the symbol OAKS.
Those who currently own equity in Acorns, which includes its management will own a majority of the newly merged company. In a statement Acorns CEO Noah Kerner said, “Going public will help elevate our story, introduce many more people to the power of compounding and financial wellness, and bring financial literacy to the mainstream,” Kerner says that his team will continue to lead Acorns.
Stash considers options to go public
Unlike Acorns, Stash has not finalized how it will go public but and is considering several options. Stash provides less-wealthy Americans with investment advice, banking, and other services. The company currently works with 5 million customers and manages $2.5 billion. According to reporting by Bloomber the company may choose to merge with a SPAC or go public via a traditional IPO. Brandon King, CEO, and Co-founder of Stash said that the firm is advised by Goldman Sachs who is continually assessing the market to determine what the best strategy for going public would be. He did not confirm what the company's plans are.
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1. Feb 2021, T. Huddleston, " What is a SPAC? Explaining one of Wall Street’s hottest trends", CNBC, [available online] available from: https://www.cnbc.com/2021/01/30/what-is-a-spac.html [accessed May 2021]
2. May 2021, " FinTech Unicorn Stash Considers Ways To Go Public", PYMNTS, [available online] available from: https://www.pymnts.com/news/ipo/2021/fintech-unicorn-stash-considers-going-public/ [accessed May 2021]
3. May 2021, L. Beltran, "Acorns Is the Latest Fintech to Sell to a SPAC", Barrons, [available online] available from: https://www.barrons.com/articles/acorns-fintech-spac-merger-51622127970 [accessed May 2021]