VIYI Algorithm With $400 Million Valuation Will Merge With Venus, Reveal the Secret of SPAC

Hong Kong – Recently, TickerWin, the main market analysis agency, has launched a analysis report “ VIYI Algorithm with $400 Million Valuation Will Merge with Venus, Reveal the Secret of SPAC “. “Gambling with other people’s money.”  At this yr’s shareholder assembly, Buffett outlined SPAC (Special Purpose Acquisition Company), whereas Munger known as it “easy money” as a result of he did not like the thought of reducing leeks for fraudulent investments. 

The two funding seniors severely blamed SPAC of hypothesis and stated it was a byproduct of new traders into shares. No one can inform you when the craze will finish, Buffett stated. Despite accusations from Buffett and Munger, SPAC has swept the world. Blackstone, KKR, CITIC Capital and different prime funding establishments have already entered the bureau. Star entrepreneurs equivalent to Richard Li, son of Li Ka-shing, Fu Wei, founder of Cambridge Capital, Wang Shi of Vanke, SoftBank founder Justice Son, Hedge Fund boss Bill Ackman and even NBA star O’Neill have all entered the SPAC.

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The purpose why SPAC is fanatical is as a result of this mannequin concentrates the traits and functions of monetary merchandise equivalent to direct itemizing, abroad mergers and acquisitions, reverse acquisition, non-public placement, which may present extra space for skilled asset managers and is a more economical and efficient method of IPO. For instance, it takes a few yr to organize for one IPO, whereas SPAC can skip complicated procedures equivalent to roadshows, hearings, and monetary statements opinions to scale back the course of to inside half a yr.

Retail traders get the alternatives and rights to spend money on early-stage high quality corporations

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SPAC is Special Purpose Acquisition Company. SPAC mannequin itemizing refers to a brand new money shell firm as the itemizing entity, buying one (or more) non-public firm with the funds raised after the first IPO, that’s, SPAC merger and acquisition transaction (De-SPAC Transaction), to appreciate the curve itemizing of the non-public firm, from which the sponsors and traders of SPAC notice the return on funding.

Simply, the existence of SPAC’s is to go public after which discover a goal firm inside 18 to 24 months to finish the acquisition. If this channel is easy, then a multi-party win-win scenario might be fashioned. Companies can go public earlier, sooner with decrease value. According to the present IPO itemizing requirements, some enterprises with excessive development expectations however troublesome to short-term money can detour SPAC—At current, the essential goal corporations are centered on info know-how, well being care, optionally available consumption and different rising industries. Entrepreneurs can save rather a lot of time and power spent in financing.

Initial 5% traders (most of the administration workforce) can naturally have low-cost funding leverage. It must be famous that the possession construction of SPAC permits the founder to accumulate the next proportion of fairness at a decrease value. The 5% of preliminary funding is transformed into 20% class B widespread inventory upon completion of the IPO. In different phrases, the administration workforce/investor places in a little bit cash and will get a 20%-30% inventory. This is the essential supply of its enormous income.  

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Retail traders have the alternatives and rights to spend money on early-stage high quality corporations. Eugene Zhang, a founding associate of Silicon Valley investor TSVC Clear Valley Capital stated American retail traders have typically been “stuck in institutions for a long time”. — Instead of investing in early high quality corporations, peculiar persons are compelled to just accept ever-higher valuations pushed up by establishments. Instead, SPAC’s IPO is raised principally inside US $500 million. Retail traders have the alternative to open blind containers of excessive development prospects at low value. These are the rights and alternatives that conventional IPO is inconceivable to present to retail traders. 

Take Virgin Galactic for instance. In 2017, Chamath, a former Facebook government, arrange SPAC and acquired 12.5 million founder shares at a value of $0.002 a share — a 20% share for simply US $25,000. —In September of that yr, the SPAC went public, providing 50 million shares at US $10, accounting for 80% of the whole fairness, elevating US $500 million. 

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Two years later, the SPAC introduced its proposed merger with Virgin Galactic, whereas Chamath personally invested US $100 million in Virgin Galactic and have become the firm’s chairman, however stored its unique administration unchanged. Virgin Galactic, a industrial manned spaceflight firm, earned simply US $200 thousand a yr with an annual loss of almost US $140 million. 

After the merger, Virgin Galactic’s unique shareholders held 52.5%, Chamath 13.2% and former SPAC outdoors traders 33.3%. Among them, 12.5 million shares had been acquired by Chamath for US $25,000, similar to the market worth of US $121 million at the completion of the merger and the corresponding yield of 4,840 instances. At the similar time, Virgin Galactic rose greater than 300% in lower than six months after the merger’s itemizing, additionally bringing excessive returns to public traders. As former Facebook government Chamath stated: “SPAC is an innovation that opens the investment ecosystem for retail investors. It has the role of democratization and ordinary people originally have no chance to get such a return.”

The goal corporations of M&A are primarily younger corporations with good development, low R&D funding and low depth  

By evaluating the distribution of “time from establishment to listing” between the goal corporations acquired by SPAC and conventional IPO corporations, the majority of them are corporations established lower than 10 years, accounting for about 56%. In phrases of segmentation, the majority of SPAC merger goal corporations had been established for five to six years, accounting for 12.93%; the majority of conventional IPO corporations had been established for 7 to eight years, accounting for 12.41%.

Then evaluate the development of the goal firm acquired by SPAC in the yr of acquisition with that of conventional IPO corporations in the yr of itemizing, the former’s property development charge, revenue and internet revenue was 1690.06%, 228.55% and 1057.51% respectively, whereas the latter was 1130.41%, 368.86% and 427.09% respectively, and the development of the SPAC acquisition goal firm was comparatively excessive. By evaluating the R&D funding of the goal firm acquired by SPAC in the yr of acquisition with that of the conventional IPO firm in the yr of itemizing, the common R&D expenditure of the former firm (US $1.39 billion, 273.79%) is decrease than that of the latter firm (US $31.707 billion, 545.92%). However, there have been 13 corporations whose R&D spending ratio exceeded 100%. Virgin Galactic Holdings, Inc. Research and growth bills amounted to US $129 million, whereas income was simply US $5 million.  

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Is it the “an equal angel” or “the demon of cutting leeks”?

The success charge of SPAC’s “blind box” video games is essentially decided by the SPAC founders, who’re skilled traders, enterprise leaders with entry to high quality firm assets or stars who convey their very own site visitors. If the inventory value is profitable and rising, they naturally profit; however when the inventory value falls, retail traders naturally lose cash, however we will not say that SPAC is a more “tricky” and more dangerous buying and selling association.

Firstly, there is no such thing as a threat of misappropriation of the raised funds. The overwhelming majority of the raised funds must be deposited in third-party belief accounts. At most, they’ll solely purchase and promote high-grade and low-yield merchandise equivalent to short-term authorities bonds, which cannot be used till shareholders agree to purchase the firm.

Secondly, SPAC cannot purchase an organization casually. SPAC’s board of administrators must confide in shareholders the causes and related info for the selection of the acquisition object and acquire shareholder approval. Shareholders who are usually not glad with the acquisition plan must also have the proper to request the firm to redeem their shares at value earlier than the acquisition is carried out.

Thirdly, SPAC’s acquisition has strict disclosure necessities. The U. S. securities market of course understands that SPAC’s “backdoor listing” mannequin for buying an organization is equal to a IPO. SEC provides formal opinions of the disclosure, presents suggestions and raises some stricter disclosure necessities for the SPAC acquisition.

Therefore, though SPAC IPO could be very speculative, the managers normally attempt to combine in the market, if somebody at all times desires to earn a living by pitting folks, these folks cannot exist for a very long time.

SPAC IPO is extremely involved by enterprises and traders

With stricter rules in the US on abroad itemizing corporations, itemizing by way of SPAC is the newest method for corporations to enter the capital markets. If home enterprises need to obtain the goal of going public by way of M&A with SPAC shell corporations, they often must construct a purple chip construction first, take abroad holding corporations as the essential physique of M&A transaction, full M&A with SPAC listed corporations by share alternate and eventually not directly be record. Major executives of corporations typically enter the administration of listed corporations inside a sure interval after the completion of the transaction.

Therefore, corporations utilizing the reverse M&A of the itemizing and financing of SPAC corporations in the United States is totally totally different from the conventional operation mode and financing mode of IPO itemizing in the United States. The SPAC itemizing financing technique focuses on the traits and functions of monetary merchandise equivalent to direct itemizing, abroad M&A, reverse acquisition, non-public placement and optimizes the traits of numerous monetary merchandise to finish the goal of enterprise itemizing and financing. SPAC is a brand new method that’s more appropriate for abroad financing itemizing after IPO, backdoor itemizing and APO. 

The two corporations that attracted the most consideration from traders in the second half of the yr had been Iconiq Motors and Central Processing Algorithm (VIYI Algo).

Iconiq Motors, a electrical automobile firm may very well be valued at about US $4billion in a backdoor itemizing in the US as quickly as the finish of the yr. Founded in 2014, Iconiq Motors is a high-end electrical car producer with places of work in Tianjin, Shanghai and Dubai with companions together with auto suppliers Magna Steyr and Microsoft. In April, Iconiq Motors obtained funding from the driverless automobile model AutoX, which stated the two sides would collectively construct the world’s first self-driving know-how new power car firm to advertise mass manufacturing of L4-class driverless automobiles.

According to numerous media reviews, VIYI Algo, a subsidiary of WIMI Hologram introduced that it will go public by way of a merger with SPAC. In this transaction, VIYI Algo is valued at US $400 million. Venus shall be renamed MicroAlgo Inc. after the deal closes. The merger shall be accomplished in the fourth quarter of 2021. VIYI Algorithm is dedicated to the growth and utility of customized central processing algorithms. VIYI Algorithm’s service vary contains algorithmic optimization, accelerating computing energy, light-weight knowledge processing and knowledge intelligence providers with out {hardware} upgrades. VIYI Algorithm successfully supplies software program and {hardware} optimization for patrons by way of customized central processing algorithms. This is the driver of VIYI Algorithm’s long-term growth.

SPAC IPO is creating alternatives for public traders to spend money on early-stage companies. Most of the main abroad exchanges have adopted or are actively learning the introduction of SPAC mannequin to enhance the attractiveness of progressive and entrepreneurial enterprises. As an progressive monetary software, SPAC actually has its benefits—It does give “unprocessed jade” corporations earlier and more handy financing alternatives. In the future, itemizing on SPAC can even turn into an choice for startups. 

About TickerWin

TickerWin is a number one market analysis agency in Hong Kong. They have constructed a proprietary analysis platform in the monetary markets. TickerWin focuses on rising development corporations and paradigm shifting corporations. TickerWin has a workforce of professionals with a confirmed observe report in market analysis reviews, business evaluation and financing pattern evaluation.

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