In a Nod to the SEC, Citi Redlights SPACs

by | Apr 7, 2022

Citi says no more SPAC IPO underwriting for now. A SPAC IPO is offset by two withdrawals. And the rest of the day’s news in SPACs.

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Citigroup (C) Redlights SPACs amidst potential legal risks

Citigroup (C) announced it has paused underwriting SPAC IPOs amidst the potential legal risks associated with new SEC rules. The SEC’s new rules would require more disclosures in SPAC deals surrounding potential conflicts of interest. Many observers have suggested that is the SEC’s rules are adopted as proposed, SPAC activity will be significantly reduced. See our detailed analysis here.

Denali Capital Acquisition Prices $75M IPO

Denali Capital Acquisition (DECAU), the fourth SPAC formed by the CEO of US Tiger Securities, raised $75M. $75M. $10.20 in trust, SPAC has 12 months to find a target, with two 3-month extensions.

Denali is led by CEO Lei Huang, who leads the US division of Chinese brokerage firm UP Fintech (TIGR). He is joined by CFO Patrick Sun, CFO of oil and gas company Lake Crystal Energy. The SPAC plans to target “unique business concepts with high-performing organizations that have both aspirations to accelerate growth and create value within the technology, hospitality or consumer services sectors.” Tiger Brokers and EF Hutton acted as joint bookrunners on the deal. 

Elsewhere in SPACs

Given the combination of a tepid market and increasing regulatory scrutiny, it’s not surprising we are seeing more IPO withdrawals. Two today:

Spinning Eagle Acquisition Corp (SPNGU) Pulls $2B Filing

Spinning Eagle Acquisition Corp. (SPNGU), formed by SPAC veteran Jeff Sagansky and former MGM CEO Harry Sloan, withdrew its IPO plans. Note that SPNGU was proposing a new SPAC structure which would break up the SPAC’s trust across multiple investments. SPNGU was to be structured such that if it had chosen not to use all of the proceeds held in the trust account for the merger, it would have had the ability to rightsize its trust account by allocating a portion to a new SPAC (SpinCo) and spinning it off as an independent, publicly-traded SPAC.

Think Elevation Capital Growth (TEGAU) Pulls $225M Filing

Think Elevation Capital Growth (TEGAU), backed by Think Investments and Elevation Capital targeting tech in India, pulled its $225 million IPO.

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