In this assignment, the current state of literature about the two pricing trends SPAC merger and direct listing will be presented, compared with the widely used bookbuilding procedure and the advantages and risks of the new methods will be explained. This knowledge is then illustrated by means of a few case studies. Due to the limited framework of this assignment, the action method is not discussed, although this certainly represents another interesting trend.
First, the second chapter of the assignment explains basic terms and briefly introduces the fixed-price method, which was often used in the past, and the current standard method, bookbuilding. In the third chapter of this paper, the process, procedure, motivation, and the distribution of the two selected procedures will be discussed, as well as their advantages and disadvantages. This is followed by two case studies that illustrate the knowledge gained in the previous chapter. Finally, the knowledge gained is summarized and an outlook on the possible future development is given.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Problem statement and aim of this paper
- Methodology applied in this paper
- Structure of this paper
- Background information and definitions
- Initial public offering
- Underwriter
- Price discovery methods
- Fixed price method
- Bookbuilding
- Recent trends in price discovery methods
- SPAC listing
- Acquisition through the SPAC
- Pricing in a SPAC IPO
- Advantages and Disadvantages of a SPAC merger
- Direct listing
- Differences to bookbuilding & Pricing
- Advantages and Disadvantages of a direct listing
- Case studies
- SPAC merger: Lucid Motors
- The Acquisition Transaction
- Reasons and risks of a SPAC merger
- Direct listing: Spotify
- Reason for the direct listing
- Risks of the direct listing from Spotify
- Conclusion
- Summary of results
- Outlook
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper examines the recent trends in alternative price discovery methods for Initial Public Offerings (IPOs), specifically focusing on the rise of SPAC mergers and direct listings. The paper aims to understand the reasons behind the increasing popularity of these methods and analyze their advantages and disadvantages compared to the traditional bookbuilding process. Key themes explored include:- The evolution of IPO pricing methods beyond the traditional bookbuilding process.
- The emergence of SPAC mergers as a popular alternative for companies seeking public listings.
- The direct listing model as an alternative to traditional IPOs, exemplified by companies like Spotify.
- The advantages and disadvantages of SPAC mergers and direct listings compared to traditional methods.
- Case studies of specific companies that have utilized SPAC mergers and direct listings, such as Lucid Motors and Spotify.
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins by introducing the concept of IPOs and discussing traditional price discovery methods, including the fixed-price method and the currently dominant bookbuilding method. It then delves into the recent trends of SPAC mergers and direct listings, outlining their processes, advantages, and disadvantages. The paper includes two case studies: Lucid Motors (SPAC merger) and Spotify (direct listing), illustrating the practical application of these alternative methods.Schlüsselwörter (Keywords)
The paper's key themes and concepts include: Initial Public Offering (IPO), SPAC (Special Purpose Acquisition Company), direct listing, bookbuilding, price discovery, capital raising, alternative IPO methods, company valuation, advantages and disadvantages, case studies, Lucid Motors, Spotify.- Citation du texte
- Tobias Clemens Arhelger (Auteur), 2022, Recent trends in alternative price discovery methods in IPO’s, Munich, GRIN Verlag, https://www.grin.com/document/1340989
