InvestorQ : Why is Upstox looking at a SPAC listing and what advantage will it gain from that?
Angel dcosta made post

Why is Upstox looking at a SPAC listing and what advantage will it gain from that?

Juvina Maggie answered.
1 year ago

Upstox is a discount broking outfit run by RKSV Securities and is already India’s second largest digital brokerage firm in terms of the number of clients. Now Upstox is exploring public listing directly in the US market via the SPAC route. SPAC is short for Special Purpose Acquisition Vehicle. In the US, these are referred to as shell firms that are floated for the sole purpose of merging an existing business into them to help them get listed.

In other words, the SPAC is a blank cheque firm with no commercial operations but solely formed with the intent and purpose of raising money to invest in a target company. Normally, SPACs are floated by professionals or very senior persons in the industry with domain skills who have already identified the target company in advance. However, there is a 1 or 2 year time-table to take the company public through the SPAC route.

SPACs may be unheard of in India but in the US it is big business. In the year 2020 alone, Wall Street raised over $80 billion via the SPAC route. The advantage is that compared to traditional IPOs, going or a listing through the SPAC route is not only quicker but it is also cheaper and less risky. Upstox has highly qualified promoters with global exposure and hence expect that the business should get better valuations in the US market via SPAC.

Upstox, like Zerodha and many recent discount broking converts, has been riding a wave of new age millennial investors forming a beeline for Indian equities. The ball-park valuation for Upstox is placed at $1 billion. Currently, Upstox has around 28 lakh customers and expects to scale up to 60 lakh customers by the end of the calendar year 2021. Tiger Global and Ratan Tata, in his personal capacity, are among the early backers of Upstox.