'US SPACs' Invested in Korea through Public Offering Funds

[Asia Economy Reporter Junho Hwang] Through domestic public offering funds, a path has opened to invest in SPACs (Special Purpose Acquisition Companies) used for listing on the U.S. stock market by companies like Lucid Motors, known as the second Tesla. Shinhan Asset Management launched the 'Shinhan U.S. SPAC Fund' on the 19th, which invests in individual SPACs listed in the U.S. and SPAC-related ETFs.

Recently in the U.S., it has become more common to go public through mergers with SPACs, companies established for the purpose of acquiring businesses to meet listing requirements or to achieve rapid listing. Space tourism company Virgin Galactic, online sports betting firm DraftKings, electric vehicle solid-state battery company QuantumScape, and hydrogen vehicle company Nikola have all gone public via SPACs. Following them, Lucid Motors, called the second Tesla, and urban air mobility (UAM) air taxis have announced mergers.

From an investor's perspective, if a SPAC fails to find a merger target within the acquisition period (usually two years in the U.S.), investors can get their initial issuance amount back. This means the downside risk in terms of investor returns is limited. Additionally, if the SPAC merges with a company, investors can secure high returns.

The SPAC fund offered by Shinhan invests about 50% of the investment amount in individual SPACs listed in the U.S. that are in the pre-merger stage. However, considering issuance amount, premium levels, and carefully analyzing the SPAC sponsors, their past successful cases, and the target industries, it selectively invests to secure listing gains from unlisted companies. About 40% of the investment amount is indirectly invested through SPAC-related ETFs that have announced mergers.

Kim Choong-sun, Executive Director of Sales at Shinhan Asset Management, said, "With growing interest in the U.S. economy forming vaccine immunity and corporate profit growth rates, the Shinhan U.S. SPAC Fund offers an opportunity to invest in innovative U.S. companies leading global industrial changes, and can also be used as an alternative for overseas IPO investments."

This fund is a product with a maturity of 2 years and 3 months, offered from the 19th to the 27th of this month, and will be established on the 28th. It is available for subscription through Korea Investment & Securities, Hanwha Investment & Securities, Daishin Securities, Korea Post Securities, and Hyundai Motor Securities.