When the SPAC market was ultra hot, Indonesia’s Traveloka was among several notable firms in the region that planned to ride the wave. In April, the countryʼs leading travel unicorn was in advanced talks with Bridgetown Holdings, a special purpose acquisition company backed by billionaire investors Richard Li and Peter Thiel, to go public. By merging with Bridgetown, Traveloka could boost its valuation to US$5 billion.
But just a few months later, Traveloka hit the brakes on its SPAC plan. The company, however, says that it remains committed to its IPO goal and is pondering different options.
Investors make these pre-combination investments based on the SPACʼs management and the anticipation of making a good acquisition. There is minimal examination of the companyʼs financials, says Alexander Korda, The Edgeʼs global deals analyst. “The management is really only responsible for making an acquisition before that two-year period expires,” he elaborates. “They are not necessarily incentivized to bring a good company to market.” With SPACs eager to make a “quick buck,” the structure of the deals tends to benefit the management more than it does the end shareholders, Korda says.