SPAC IPOs have some big advantages, and here’s one company’s story.
The boom in mergers through special purpose acquisition companies (SPACs) might have died down, but some companies are still finding value in going public through these “blank check” companies as opposed to the traditional IPO route. In this Fool Live video clip, recorded on Dec. 7, CEO Matt Roberts of vacation rental manager Vacasa (NASDAQ:VCSA) explains to Fool.com contributor Matt Frankel why the SPAC route made sense for his company.
Matt Frankel: Why did Vacasa choose the SPAC route to go public? Was it about raising the capital, was it about getting a partner, was it all of the above?
Matt Roberts: It’s a little bit of all of the above. In many ways, it looks very much like a traditional IPO. There were no warrants for this SPAC structure with TPG [TPG Pace Solutions, its SPAC partner], there’s no selling shareholders at all. It’s actually a relatively low float, so in many ways and it certainly was an option for us to just to go the traditional IPO route. At the end, the result is the same, but we’re now independently trading as V-C-S-A on the Nasdaq, and really the business performance going forward is really going to drive that valuation from this point up.
Frankel: Although it wasn’t technically part of the SPAC merger, you got two new board members today. I wanted to briefly mentioned those, because they seem like pretty impressive additions here. Barbara Messing is chief marketing officer at Roblox (NYSE:RBLX) and has an impressive history in the travel industry, and then Karl Peterson is co-founder of Hotwire. What do they mean to Vacasa? How did this come about? Talk to us about the new board members a little bit.
Roberts: Sure, absolutely. Well, Karl is a founding member of TPG Pace Solutions, so the SPAC partner that we chose, and it was a big opportunity for us to add that level of expertise to the board in addition to raising the capital. Barbara is a fantastic new addition. We welcome her experience, and her marketing knowledge, and advice as we look to grow our brands to be the first hospitality brand in vacations.
Frankel: Excellent. So you’ve got a lot of support for the deal. I saw 96% of TPG Pace shareholders voted in favor of the deal. Unlike a few other recent SPAC mergers, I don’t really want to mention any names, but one was the one that went public yesterday. You didn’t see a ton of redemptions in terms of the shares of people who are pulling their money out and saying, “No thanks.” So a lot of shareholder confidence in the deal. That has to make you happy that so many of your shareholders are on board for the next chapters.
Roberts: Yeah, absolutely. I mentioned before, none of our existing shareholders sold a single share in this operating team. There’s a lot of commitment by the existing base of shareholders, the shareholders that are now newly joining those shareholders in the business opportunity, and it makes sense. It’s a massive market that we have in front of us with a significant amount of high-growth rate to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool owns and recommends Roblox Corporation. The Motley Fool has a disclosure policy.