By Ciara Linnane
“A listing is simply not worth it if the result is steep fees, little funding, low liquidity, and reputational harm from poor returns,” said Smith from Renaissance.
IPOX’s Schuster noted that many SPACs are close to 2 years old, and if they haven’t consummated a deal they may be forced to liquidate and return the money to investors. The majority of SPACs underperform traditional IPOS, “and are just bad deals,” he said.
Both Goldman Sachs /zigman2/quotes/209237603/composite GS +0.42% and Citigroup Inc. /zigman2/quotes/207741460/composite C +0.16% recently said they would no longer work on SPAC deals, he said, while Bank of America said it would reduce its exposure. Schuster compared the phenomenon to the 2000 dot-com period, when bulge-bracket banks couldn’t get enough tech startup IPO businesses — until the crash, at which point they all pulled away.
“Solid companies that want growth financing will always find the IPO route is best,” he said.
This week’s sole deal, that of Phoenix Motor Inc. /zigman2/quotes/235495550/composite PEV +1.26% , was downsized late Tuesday and priced below the midpoint of the range.
A spinoff of SPI Energy Co. Ltd., the company designs, assembles and integrates electric drive systems and light- and medium-duty electric vehicles, such as forklifts, and markets and sells electric chargers.
Phoenix offered just 2.1 million shares, priced at $7.50 to raise $15.75 million at a valuation of $150 million. The original plan was to offer 2.5 million shares priced at $7 to $9 a pop.
The company has applied to list on Nasdaq under the ticker symbol “PEV.” As of year-end, Phoenix had delivered 104 electric shuttle buses and work trucks.
“Phoenix Motor is highly unprofitable and has yet to generate significant revenues,” said Renaissance’s Smith.
The company had a net loss of $2.32 million in the quarter ending March 31, wider than the loss of $1.91 million posted in the year-earlier period, according to its prospectus. Revenue rose to $671,000 from $473,000 a year ago.