Dusseldorf The holiday home broker Hometogo will be able to launch a major attempt on the stock market in Germany in a few days: since a huge boom in Spacs began two years ago in the USA, there has not yet been such an IPO in Germany. A shell company founded only for this purpose takes over a young company and thus helps it to enter the public capital market. For start-ups, spacs are primarily seen as a quick and cost-effective way to go public.
The Berlin company of co-founder and CEO Patrick Andrae has now cleared the last hurdle. The shareholders of the shell company founded by investor Klaus Hommels have unanimously approved the takeover. The result and the inflow of money is a “game changer”, Andrae said on Monday.
However, almost 37 percent of the shareholders did not want to exchange their shares in the shell company for Hometogo shares. Your exit means a loss of around 100 million euros for the holiday home platform. Instead of the planned 350 million euros, Hometogo will only collect a good 250 million euros. Among other things, the company wants to use it to make acquisitions.
Compared to many other Spacs, the return rate at Hometogo is very good: According to the Citi-Bank, around 70 to 90 percent of Spac shareholders leave the financial vehicle again when the goal of the investment has been determined. This trend has intensified since spring. At the Munich air taxi company Lilium, which goes public on Wednesday in New York via Spac, almost two thirds of the shareholders gave back their shares in the shell company Qell before the merger. Like Lilium, many German start-ups are currently receiving Spac offers from the USA.
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Klaus Hommels, on the other hand, has decided to try out the instrument together with Hometogo in Europe, to explain it and then to make it popular here. With his venture capital firm Lakestar, based in Berlin, Zurich and London, he is one of the most prominent investors in Europe. He has two main goals: on the one hand, to finance more young companies with European money. On the other hand, to offer everyone the chance to invest in very young companies with great growth potential.
How does a spac work?
While the IPO via Spac should be less complicated than a conventional IPO, especially for young companies, the vehicle often appears to outsiders to be complex at first. In a very simplified way, a Spac IPO takes place in six steps:
- A Special Purpose Acquisition Company (Spac) is founded and floated on the stock exchange. It announces the area in which it wants to be active and collects money from investors. A share usually costs ten dollars or ten euros.
- The initiators use the money to search for a start-up that they want to take over.
- The takeover intention will be announced.
- As soon as the specific takeover target is known, the initiators usually also raise so-called pipe financing from large financial investors.
- Then the owners of 51 percent of the share capital must agree. Anyone who is not convinced of the start-up can exit without losses. (The pipe investors do not have this option.)
- Spac and start-up merge and the IPO is complete.
In a sense, the shareholders of a wallet initially literally buy a pig in a poke. However, you can claim your money back once you have taken a close look at the cat. Even if the market environment or your financial situation has changed in the meantime, or if you simply no longer feel like investing in Spac, you can get out. Viewed in this way, the vehicle is very investor-friendly.
Nevertheless, there is also a lot of criticism of Spacs. This is because the initiators can construct the vehicle in such a way that they generate high revenues regardless of the stock market development of the acquired company. This is impossible with the Lakestar-Spac: Hommels has linked its proceeds to the success of Hometogo.
The merger and the IPO of Hometogo should be completed in September. Then it will show whether the bet works. The investor and the Berlin company itself are relying on a travel boom in the outgoing corona pandemic. The demand for holiday homes on the platform has also increased over the past year.
More: Hometogo boss Andrae on the Spac IPO: “Of course, speed was an argument”