Swiss-based Sportrader is reportedly mulling going public with an IPO by merging with a special purpose acquisition company (SPAC) and there are many of the so-called “blank check” companies that are looking to acquire such firms.
Sportico first reported that Sportrader, which provides detailed sports data to the media, bookmakers, sports and government, and has penned deal with several sports leagues, is exploring its options for going public. The 20-year-old company has been invested in by Mark Cuban, Michael Jordan and Ted Leonsis. It has declined to confirm the report.
Possible “blank check” companies that might find Sportrader interesting include the Pershing Square Tontine, which has $4 billion to play with; billionaire Barry Sternlicht’s Jaws Acquisition; and a recent SPAC, RedBall Acquisition, formed by Billy Beane (who was profiled in the book “Moneyball”) and Gerry Cardinale of Redbird Capital.
SPACs are a relatively new and popular way for companies that seek to raise enough capital to go public on the New York Stock Exchange. They are formed with two years to execute a deal with investors getting their funds back if the SPAC fails to do so.
Daily fantasy sports giant DraftKings is one of the most well-known companies to have gone public through a SPAC that was sponsored by Texas billionaire Tilman Fertitta.
In 2019 59 SPACs were formed, nearly a record, compared to 112 IPOs by the traditional route. SPACs cost less, with 2.6 percent being an average, compared to 5 percent in fees for bankers to offer an IPO.
Another risk for an IPO is that it may be underpriced, which raises less money for the company. Negotiating with a SPAC goes around the valuation risk, with a company such as DraftKings being able to make EBITDA projections directly to investors. But they can only do at the time of their listing, and SPACs are prevented from holding discussions with possible targets ahead of time.
