March 14, 2022
I believe that the proposed rule changes described by SR-NYSE-2021-45 are beneficial to the market and investors.
As retail investor, I have seen that institutions and well-connected investors have long monopolized profits on investments in pre-IPO private companies. I believe the SPAC structure attempted to correct this, to allow all to benefit from the launch of companies into the public markets. However, there are certain shortcomings of the SPAC structure, mainly the ability to Opt Out, tying up investor capital during the search period of the SPAC. This creates perverted incentives between finding a quick deal (helps the sponsor) and finding the best deal (helps investors).
The proposed subscription warrants as part of a SPARC structure goes a long way to improve some of the shortcomings of SPACs. They allow investors to hold on and not worry about longer search times, if it results in better negotiations and deals being made with the targets. Further, they allow investors who believe in the decision making abilities of the sponsors to efficiently deploy capital to invest in them. Finally, they are no more likely to be manipulated by rumors/deals than traditional SPACs.
The SEC has long stated their interest in improving blank check investment vehicles and these subscription warrants are a step in the right direction.