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As explained on the previous page, cryptocurrency exchanges are beginning to aim for stock listing in order to gain the trust of institutional investors. However, initial public offerings (IPOs) take a lot of time and money. Therefore, a method that is currently attracting attention is listing on the US market using a special purpose acquisition company (SPAC).
SPAC is translated as "special purpose acquisition company" in Japanese. As the name suggests, it is a paper company established for the purpose of acquiring a company and does not conduct any particular business. SPACs are often established with the capital of well-funded investors or well-known managers, and the entity that establishes a SPAC is called a "sponsor."
The sponsor's purpose is to list a promising and attractive company (called a target company) that is not listed on the stock market and earn dividends. The sponsor uses their track record and name recognition to list the SPAC they established on the stock market and raise funds from general investors.
Once the funds are raised, they acquire and merge the target company, and then change the name of the listed SPAC to the target company. In this way, the target company is listed on the stock market as is.
By using a SPAC as an intermediary, the strict screening process for listing is simplified, so even companies in venture and cryptocurrency industries, whose creditworthiness and growth potential are still unclear to investors, can list and raise funds relatively easily. Above all, the simplified screening process significantly shortens the time it takes to list.
SPACs are also being used by Monex Group, which has been in the news, to list its subsidiary Coincheck Inc. on the NASDAQ.
Coincheck's SPAC, Thunder Bridge Capital Partners Ⅳ, Inc., will acquire and merge the target company, Coincheck Group B.V., which is scheduled to become Coincheck's holding company. Once the business integration is complete, the company will change its name to Coincheck Group N.V. and operate in the Netherlands.
●At the time of listing, they are paper companies
●The purpose is to acquire and merge private companies and list them
●In the United States, investment funds are protected by investor protection regulations
The SPAC method is not recognized in Japan. Therefore, Coincheck aimed to list a SPAC in the United States this time. SPACs are sometimes ridiculed as "backdoor listings" because they do not follow the formal IPO procedures, but they are currently officially recognized in the United States, Canada, and Singapore, and new rules are being formulated in the UK from 2021 to encourage SPAC listings. In fact, before Coincheck, SoftBank Group used a SPAC to list on the US stock market, and discussions on lifting the ban on SPACs began in Japan in June 2021. The SPAC system itself was created in the early 1990s. Why is it attracting attention again now? The reason is the state of the US economy after the COVID-19 pandemic. The Biden administration distributed large amounts of temporary support funds to each household, resulting in a flood of cash in the US market. The United States currently has a high interest rate policy because excess cash leads to high prices, but Americans, who have less of a sense of savings than Japanese people, are channeling this cash into financial markets, which is why the current US economic boom is happening.
Normally, the standard way for ordinary people to invest is to put it into stocks that are as solid as possible. However, cash is overflowing. Although it is unclear what to invest in, people may have the leeway to invest in SPACs, which are expected to pay high dividends.
On the other hand, many entrepreneurs aiming for IPOs are vaguely aware that the US economic boom is still unstable. With the future uncertain, the number of companies that take the costly normal IPO process has decreased. SPACs have emerged as an alternative. Thus, SPACs have come into the spotlight around 2021.
Currently, the center of cryptocurrency trading is still the United States. Coincheck probably assumed that the United States, which has a well-developed SPAC system, would be able to list quickly and raise funds more easily than Japan. It is expected that the success of this SPAC listing will become clear around September 2024.
*SPAC listing to be announced in November 2024
・In the fast-changing Web 3.0 industry, SPACs are gaining attention as a faster way to list than an IPO
・The booming US economy is boosting SPACs
・The cryptocurrency market is centered in the US, so listing in the US is seen as attractive
Glossary
CoinCheck: A cryptocurrency exchange operated by Coincheck, a wholly owned subsidiary of Monex Group, Inc.
Monex Group, Inc.: A major financial holding company headquartered in Minato-ku, Tokyo
Paper company: A company that is registered as a corporation but does not actually carry out business activities. There are also companies that have been dissolved or have left production untouched, and dummy companies that are used as a cover for unscrupulous businesses, but the one we are explaining here is called a special purpose company (SPC).
【NEWS】Coincheck Files Registration with the SEC for Nasdaq Listing, Aiming for IPO by September
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