Latin America has a new SPAC vehicle ready to find and merge with a company to bring it to the stock market. Called LatAmGrowth, the blank-check firm announced on Tuesday that it priced its IPO of 13 million units at $10 per unit. Each unit consists of one share of common stock and one-half of a warrant, exercisable at $11.50.
LatAmGrowth SPAC comes at a time when stocks are dropping as investors fear that the U.S. Federal Reserve will raise interest rates. Even though investors fear a bear market, as a blank-check firm, LatAmGrowth is only meant to merge with another company to take it to the stock market. For this, the IPO of the SPAC vehicle is the first step.
This company, which has no operations, started to trade on Nasdaq under the ticker LATGU (LATGU). When it finds a target company and merges, that target company becomes listed, and the ticker LATGU will become the name of the target company.
Thus, a company that wants to enter the capital markets but does not want to go under the scrutiny of a traditional IPO -- either because of the price or the long time it takes to do an IPO -- it can choose to merge with a SPAC. Through that, firms exchange the IPO arbitrage for an M&A one.
LatAmGrowth’s focus is to merge with a “high growth” company in Latin America, and US businesses that cater to the Hispanic community. The new SPAC is looking for startups that have significant technological advantages, and/or that are well-positioned to benefit from the favorable structural and secular trends of the emerging middle class.
LatAmGrowth now joins MEKA (Mercado Libre and Kaszek SPAC, that raised $287 million in Nasdaq), XPAC (broker XP’s SPAC, which raised $200 million on Nasdaq), and SPACs Valor Latitude (also IPO’d at $200 million on Nasdaq), DILA Capital ($50 million on Nasdaq), and SoftBank LDH Growth I ($200 million on Nasdaq), in the search for a merger company in the region.
Alpha Capital Acquisition announced late last year that it would merge with Brazilian Semantix. Before that, SPAC Andina Acquisition Corp I, which raised $42 million on Nasdaq, merged with Tecnoglass in 2013.
Since the SPAC has no operations, it is usually founded by an already renowned investor, on whom SPAC investors are betting will make the right decision and find the best company for the merger. LatAmGrowth is led by Eduardo Cortina, LatAmGrowth’s chairman and co-managing partner of Colony LatAm Partners, which is being rebranded to SouthLight Capita. The SPAC’s CEO is Gerard Cremoux, the former Head of Investment Banking for Latin America at UBS Investment Bank.
BofA Securities and BTG Pactual acted as joint book-runners on the IPO.
This article was updated to add info about MEKA’s SPAC