Facebook Billionaire Eduardo Saverin’s B Capital Abandons SPAC Plans Amid Market Volatility

[view original post]

B Capital—an investment firm led by Facebook cofounder Eduardo Saverin and former Bain Capital executive Raj Ganguly—won’t pursue an earlier plan to launch a special purpose acquisition company (SPAC), joining a growing number of companies pulling the plug on such deals amid surging market volatility.

“We’ve looked at the option to do our own SPAC,” Ganguly, managing partner of B-Capital, said in a recent interview with Forbes Asia via video conferencing. “At this point, we don’t have any current plans to do a SPAC. We do think the SPAC market is an interesting market that got quite overheated last year.”

In February 2021, B Capital filed paperwork with the U.S. Securities and Exchange Commission to raise $300 million for a SPAC, dubbed B Capital Technology Opportunities Corp. Since then, investors’ appetites for SPACs have turned sour as the Covid-19 pandemic continued to disrupt the global economy and global equity prices plunged as Russia invaded Ukraine. Many of the high-profile SPAC-sponsored listings have tanked, with shares of Southeast Asian ride-hailing and delivery giant Grab trading well below their IPO prices amid concern over the company’s deepening losses.

“Right now, it doesn’t seem like a positive environment for SPACs,” Ganguly said.

Over 3,000 SPACs went public last year around the world, raising more than $600 billion from their IPOs, according to data compiled by U.S. law firm White & Case. But that’s set to slow down this year, with several companies—including Chinese buyout firms Gaw Capital and Hony Capital as well as U.S.-based Victory Acquisition—cancelling SPAC plans in recent weeks.

“The problem was a whole bunch of SPAC (funding) was raised that are going to expire in 2022 and they’ve got money burning a hole in their pockets at least until their investors redeem and they’re all looking for deals,” Ganguly said.

B Capital is also not rushing to launch IPOs for their portfolio companies, either through SPACs or traditional listing paths.

“You can have the best business in the world but the IPO window is fairly shut,” Ganguly said. “I don’t think you’ll see many IPOs right now. It’s going to take a few more quarters before you see IPOs coming back.”

Founded in 2015 by Saverin, Ganguly and legendary investor Howard Morgan, B Capital currently has over $3.5 billion of assets under management with offices across Beijing, Hong Kong, Singapore, New York, San Francisco and Los Angeles. The firm, which is also backed by Boston Capital Group, has invested in more than 145 companies globally, including some of Asia’s fastest growing unicorns such as India’s online education platform Byjus and Singapore’s tech-driven regional logistics firm NinjaVan.

“So many of our companies have been contacted by SPACs,” Ganguly said. “For now, we’re slightly skeptical of companies in our portfolio going into a SPAC path.”

B Capital—whose portfolio companies are focused across enterprise software, fintech and healthcare—are not rushing to raise capital through an IPO, Ganguly said. “When our companies exit, we want them to be really well prepared.”

Part of that preparation is to build the startups’ path to sustainable profitability before going public. “In the current market condition, I wouldn’t support our companies going IPO unless they are profitable,” Ganguly said. “Let’s see how the market evolves in the next couple of quarters.”

In the meantime, the firm will continue helping portfolio companies from North America—where it has invested in more than 50 startups—to tap into growing opportunities in Asia and build their presence in the region. One such company is Yalo, a San Francisco-based conversational commerce platform that connects enterprises and consumers, is expanding into India after raising $50 million from investors led by B Capital last year.