After BNK No. 3, Now Shinyoung No. 11... 'SPAC Warning'

As funds continue to flow into the initial public offering (IPO) market, price volatility for Special Purpose Acquisition Companies (SPACs) on their listing day has increased. This is the result of speculative capital seeking short-term trading gains. Many individual investors, enticed by sharp price surges early in the session, end up incurring significant losses. Experts in the financial investment industry have cautioned that, due to the nature of SPACs, buying at prices higher than the public offering price carries a high risk of loss, urging investors to exercise caution.

According to the financial investment industry on November 25, Shinyoung SPAC No. 11, which debuted on the KOSDAQ market the previous day, began trading at 3,300 won-65% higher than its public offering price of 2,000 won-and surged to 5,200 won within four minutes. However, it soon gave up these gains and closed at 2,005 won. Within a single day, the stock fell 61.4% from its peak.

The first-day trading volume reached 78.12 million shares, 13 times the total listed shares of 6.07 million. Despite a market capitalization of only 12.2 billion won, the first-day trading value of Shinyoung SPAC No. 11 nearly reached 305 billion won. Individual investors purchased 8.7 billion won worth of shares in one day, recording a valuation loss rate of -48.7%.

Previously, BNK SPAC No. 3 was listed on the KOSDAQ market on November 21. On its first day, it opened at 2,980 won, soared to 7,700 won, and then closed at 2,100 won. The closing price on the first day was the lowest of the session. The first-day trading value exceeded 370 billion won. On its second day of trading, BNK SPAC No. 3 fell by more than 5%, dropping below its public offering price of 2,000 won.

Over two days, individual investors purchased 2.5 billion won worth of shares, and the valuation loss rate reached -59.8%. The average purchase price was 4,943 won, 2.4 times the public offering price.

A SPAC is a shell company (paper company) whose sole purpose is to merge with another company using funds raised through an IPO. The financial authorities introduced SPACs to allow ordinary investors to participate in the mergers and acquisitions market with small amounts of money while ensuring investment stability. SPACs must deposit at least 90% of the public offering funds separately and, if they fail to complete a merger within three years, must return the funds to investors.

Shinyoung SPAC No. 11 will deposit the entire 11.6 billion won raised through its IPO in trust at Kookmin Bank. If a merger is completed, the deposited funds will be used as operating capital for the surviving entity after the merger; if the merger fails and the SPAC is dissolved, the funds will be returned to shareholders.

Generally, when the stock price of a SPAC rises, it becomes more difficult to successfully carry out its intended merger with an unlisted company. The merger price is determined based on the SPAC's market capitalization. When the SPAC stock price increases, the shareholding ratio of the unlisted company's shareholders in the merged entity decreases. If the merger fails and the SPAC is dissolved, even investors who acquired shares at prices higher than the public offering price will only receive their principal at the offering price plus interest.

An industry insider commented, "Historical data shows that SPAC stock prices often remain at the public offering price level," adding, "You should be cautious when investing at prices above the offering price."

원본보기 아이콘

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.