Mar. 30, 2022
To whom it may concern - I am an adjunct professor at Columbia Business School in the value investing program, a former institutional investor, current board member of two public companies, and a current holding of Pershing square Tontine. I wanted to pass along a few comments on the proposed Sparc structure, and particularly as it relates to PSH, as I believe it has a number of advantages over traditional Spacs: 1) traditional spacs give the option for investors to redeem their shares on deal announcement if they don’t like the deal. The sparc gives the same optionality (don’t exercise the warrant), without having the investors tie up their capital till a deal is found (so sparc has same effective result without tying up capital in the interim period) 2) structure does not have the typical 20% sponsor equity (which results in significant dilution to investors in the spac).. I believe in this case the sponsor gets warrants on ~5% of the share outstanding at a strike price 20% above the spac price (good alignment) 3) decreases time pressure for a deal, which sometimes creates a misaligned incentive (as sponsor feels pressured to do a deal to ensure they get their 20% equity in the deal) 4) in this case, there is significant participation by the sponsor on the same terms as investors, which creates alignment Overall, I have found the spac structure to have a lot of flaws that favor the sponsor at the expense of investors. I believe the sparc structure proposed by Pershing reduces a lot of the misalignment, particularly the way they have proposed it. I believe it is a better structure than a spac and should be considered by the sec. Please feel free to contact me for any further comments. Best, Anuroop