Page 38 - Banking Finance March 2022

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common stock. Depending on the bank issuing the IPO and To keep the pace with the evolving market environment,
the size of the SPAC, one warrant may be exercisable for a International Financial Services Centres Authority (IFSCA) in
fraction of share (either half, one-third or two-third) or a the Gujrat International Finance Tec-City (GIFT City), has
full share of stock. recently released a consultation paper where IFSCA is
exploring to facilitate listing of SPACs in the GIFT City. The
For example, if a price per unit in the IPO is $10, the warrant proposed framework by IFSCA is expected to provide an
may be exercisable either 30 days after the De-SPAC ecosystem for capital raising and listing by Fintech and other
transaction or twelve months after the SPAC IPO. The public start-up companies. The proposed framework will also
warrants are cash-settled, meaning that the investor must facilitate issuers from across the jurisdictions to raise the
pay the full cost of the warrant in cash to receive a full share capital for variety of needs.
of stock.
The salient features of the IFSCAs framework for
Founder warrants, on the other hand, may be net settled, listing of SPACs is as under:
meaning that they are not required to deliver cash to receive i. Offer Size: Not less than USD 50 million or any other
a full share of stock. Instead, they are issued shares of stock amount as may be specified by the Authority from time
with a fair market value equal to the difference between to time. Further sponsor shall hold at least 20% of the
the stock trading price and warrant strike price. post issue paid up capital.

ii. Minimum application: The
minimum application size in an
initial public offering of SPAC shall
be USD 250,000.
iii. Minimum subscription: At
least 75% of the offer size.
iv. SPAC specific obligation:
Requirement have also been
prescribed with respect to
maintenance of escrow account,
eligible investments pending
utilization, acquisition timeline of
3 years extendable up to 1 year,
right of dissenting shareholders,
liquidation provisions, etc.
v. Post Business acquisition:
The issuer resulting from the
completion of the business
acquisition by the SPAC shall be
required to meet the listing eligibility criteria set out in these
Where India stands in SPAC race? regulations within 180 days, in order to continue the listing
on the recognized stock exchange(s).The shareholding of the
SPAC deals in India are still at a nascent stage, the number
sponsors in the target company shall be locked up for a
of SPAC related conversations in the Indian transactions
period of 180 days from the date of closing of the business
space is swiftly growing. Credit Suisse estimates that India
acquisition.
is home to at least 100 highly valued, as-yet unlisted unicorns
- startups worth more than $1 billion each, with a combined Can Indian resident individuals invest in
market capitalization of $240 billion. During the budget
speech of 2020, Finance Minister Smt. Nirmala Sitaraman a SPAC?
promised to relax foreign investment rules. Yes, Indian resident individuals can invest in an overseas

38 | 2022 | MARCH | BANKING FINANCE