Mar. 29, 2022
To whom it may concern, I am a retail investor. The current SPAC structure is unfavorable to retail investors. SPACs are typically incentivized to make a deal within a 2 year window, leading to a few major concerns. SPARC addresses all these concerns. Namely, I outline the concerns below: 1. Negotiating leverage due to time pressure: given both (a) the time pressure to consummate a deal and (b) the monetary and reputational risk of failing to consummate a deal, target companies have a stronger negotiating position when discussing going public via a SPAC, thus resulting in a high likelihood that the acquisition of the target company by the SPAC (if it were to occur) is not going to be on terms favorable to the SPAC. SPARC provides a significantly longer timeframe under which a deal can be consummated, effectively eliminating the time pressure risk. 2. Capital lockup: a SPAC requires investors to lock significant capital for a duration of up to 2 years as the SPAC looks to consummate a deal. There is an opportunity cost associated with this capital as the investor can not invest this money elsewhere. If the SPAC does not consummate a deal by its dissolution date and the investor receives capital back at the net asset value of the SPAC multiplied by the number of shares the investor held, then that implies the investor lost money over the period from the start of their investment through dissolution due to inflation, which is incredibly high now. While SPAC warrants reduce the capital lockup required, they have their own risk of being worth $0 if a deal is not consummated by the SPAC during the 2 year timeframe. SPARC significantly reduces the capital lockup risk and warrant risk by (a) providing the investor with the right to invest in the target company, once identified an agreement has been made, via SPARC and (b) reduces the risk of investment expiring worthless (warrant risk) due to the significantly longer time period under which a merger can be completed. 3. Risk of holding through merger: often SPACs suffer from the problem that both sponsors and investors are looking to make money off the SPAC vehicle itself and care less about a highly lucrative merger. SPARC incentivizes shareholders to hold through merger and to care about the long term performance of both the target company and the SPARC sponsor, given SPARC holders can also be granted future rights to future SPARC investment vehicles. For all of the above reasons, I vote in favor of approving this rule and SPARC. Aspyn, retail investor