A Michael Klein and Sam Altman SPAC downsizes
Originally seeking to raise about $1 billion, a SPAC backed by blank-check powerhouse Michael Klein and former Y Combinator president Sam Altman cut the expected size of its deal by 60%.
Dubbed AltC Acquisition, the special purpose acquisition company now plans to raise about $400 million as it seeks to buy a business with a stable free cash-flow and the “potential to grow through further acquisition opportunities,” an IPO prospectus filed Friday revealed.
Wary of the latest blank-check stampede, many SPAC watchers predict that the herd will thin out: The weaker will return money or enter into less-than-desirable deals, while the stronger with well-known sponsors will survive.
It’s unclear why AltC so dramatically culled its planned listing, but by name brand alone, Altman and Klein certainly fit into the stronger group of SPACs. Beyond Y Combinator, Altman has invested in companies including Instacart and Reddit, and leads OpenAI as its CEO and co-founder. And Klein has executed one mega SPAC merger after the next, including a buzzy $24 billion combination with electric car maker Lucid Motors.
So the downsizing is something of a surprise, but it’s also worth wondering: To what extent was it a conscious decision versus one driven by recent market conditions?
At any rate, the larger the SPAC, the smaller the universe of potential acquirees. And there is a lot of competition out there: SPACInsider estimates that some 423 blank-check companies are hunting for a deal. AltC’s move will likely widen its own net.
The SPAC markets have also been cooling in the backdrop. One symptom: the rise of SPAC lawsuits, often with investors alleging inadequate disclosures. A SPAC merger backed by Klein, MultiPlan, was hit by its own suit in March, with an investor alleging the SPAC’s board effectively overvalued the tie-up.
BYTEDANCE VS. ALIBABA: Here’s a great story on the battle for e-commerce in China, playing out between ByteDance and Alibaba. ByteDance, per Bloomberg, has been hiring thousands of staff to sell goods off of its short-form video app and livestream products. Read more.
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