Blank check companies, better known as special purpose acquisition companies (SPAC), have seen a surge in popularity in 2020. In fact, this year several high-profile companies went public thanks to a SPAC reverse merger, while 39 SPAC IPOs have raised a total of $12.3 billion, almost exceeding total SPAC proceeds raised in 2019.
The largest blank-check firm on record, Pershing Square Tontine Holdings Ltd, began trading in July after raising $4 billion.
Now, another hot contender in the blank check arena, Dragoneer Growth Opportunities - a company by Dragoneer Investment Group - has filed with the SEC to raise up to $600 million in an initial public offering. The SPAC plans to sell 60 million units at $10 each, according to the filing.
Mark Stad, Founder, Chief Executive Officer, and Chief Information Officer of Dragonner Investment Group, currently serves as the CEO and Chairman of the SPAC. Dragoneer Growth Opportunities focuses on targeting businesses in software, internet, media, consumer/retail, healthcare IT, and financial services/fintech sectors.
Founded in 2020, the San Francisco firm filed confidentially on July 17 with Goldman Sachs and J.P. Morgan as joint book-runners on the deal.
While Dragoneer has managed to fly under the radar, its previous investments have been with heavyweight companies. This includes Alibaba Holding Ltd., Datadog Inc., Uber Technologies Inc., Slack Technologies Inc., and Snowflake Inc.
In April, DraftKings debuted as a publicly-traded company after Diamond Eagle Acquisition announced a three-way merger valued at $3.3 billion between DraftKings and SBTech. While this was deemed an unorthodox route to becoming a public company for a very untraditional firm, this process is becoming the new norm.
Earlier in March, Nikola Corp. went public following a reverse merger with VectorIQ Acquisition. The deal gave Nikola an enterprise value of $3.3 billion and raised $525 million from investors.
Notably, the fallout from the global pandemic has fueled a new wave of interest in SPAC. While blank-check companies have a "shaky reputation," what they offer is hard to resist for some companies. Ultimately, it's a radical way of making an initial public offering. With its popularity surging due to the market volatility caused by COVID-19, the new craze is bound to set the tone for the near future.
