The Big Three-O

Ladies and Gents,

'Twas a week. Ya girl turned the big Three-O! That big number was doing a real number on me in the weeks leading up to it, but now that I have made it on the other side, I am feeling just fine! 

I’m usually not big on birthdays but there was something about turning 30 that stirred a lot of emotions in me. It’s like reaching a checkpoint where you need to take a minute and reflect on how far you’ve walked, how the journey has been, what experiences have impacted you and soak it all in. But it’s not just looking back, it’s also looking forward. At the big trek that lays ahead. And figuring out if the current path is the right one, or do you need to re-route, what people you want on this journey, and will you embrace the uncertainty with curiosity. It is reflective, nostalgic, humbling, exciting and daunting. It is an inflection point. And I don’t mean the number itself, but more the mental evolution that surrounds it. As far as the actual number goes, I love this quote by Mark Twain, “Age is an issue of mind over matter. If you don’t mind it, it doesn’t matter”. Markie is right indeed. 

Oops, sorry. Looks like I accidentally swapped the SPAC journal with my personal journal. One sec, let me find what happened with SPACs this week. Well, it seems like the big Gemini energy was hovering over the SPAC land as well, and the Friday sell-off didn’t help. The merger vote trade for this week’s votes got crushed because of crazy redemptions in $HEC (63%), $CRSA (60%) and $FAII (26%).

$MAPS is holding well post merger. The Friday dip was a buying opportunity. Spoken like a true millennial I know. There seems to be some mis-pricing in $LEAP units (which was on the list from a few weeks ago). The units are trading at $10.35, which is below the commons at $10.46. And accounting for the warrants, the units should be trading closer to ~$10.88. So not only it’s relatively cheap, but cheap on the whole as well. Would be worth picking up some units and splitting into commons and warrants, while we await a deal!

$ATVC units are cheap as well right now, but they tend to suffer from poor liquidity. $IPOF warrants have had a nice run up recently as well. Although chances of Chamath announcing a deal while he is vacationing in Italy have been historically slim. My bestie Jojo, who is also in Italy right now, shared that qualitative piece of SPAC due diligence with me.

On the deal announcement front, there were 5 deals announced this week, and 4 out of the 5 traded below par. Although the sentiment is improving, the market continues to evaluate the new deals with a skeptical lens and there is a renewed bid for quality. It’s like investors are finally opening the deal decks and looking at the numbers! Which is a good thing as it will get the Sponsors to look at the numbers, which in turn will get the Targets to also go back and check their homework. It is another proof that SPACs are here to stay because after the February slaughter, the market now, is not punitive on the overall asset class but just the bad players. It’s like going to an amusement park. Just because there are some fatalities on one dangerous ride, you don’t just shut down the entire park. You remove the dangerous ride and introduce more precautionary measures but the park remains open. It is the same for SPACs as well. And it is important from a long term perspective as all of this is setting the base for adoption of SPACs as a credible alternative for a company to go public.

There are 5 names on the merger vote calendar this week and 4/5 are trading below par. They had all run up in the last two weeks as the merger trade caught more attention and are now back to their pre-euphoria levels.

As I wrote last week, I like $FTOC. It is merging with Payoneer, a global payments platform serving over 5 million enterprises, marketplaces and SMBs in over 190 countries. Betsy Cohen, the Fintech Queen is the $FTOC chairwoman, and did the deal at a ~$3.3B valuation or 7.6x 2021 revenues of $432M. Payoneer reported $44.4B in transaction volume for 2020, a 67% volume growth and is projected to do $64B next year. Covid was a hiccup as international travel was down, and it impacted the revenue and profit growth slightly, (though still positive) but with the world re-opening, that hiccup should go away. The company has projected a 25% revenue growth for 2021 making it closer to PayPal ($PYPL), Square ($SQ) and Bill.com ($BILL) in its revenue growth profile but is trading more like a Fiserv ($FISV) right now.

For example, $BILL is trading at a $14B market cap and their 2021 revenue target is only $212M (vs $432M for Payoneer). On the payments volume side, the company only had $35 billion in payments volume last year vs $44.4B for Payoneer. It is important to focus on the volume growth as the take rates decline in this industry, so revenue growth increasingly becomes dependent on the volume growth. $BILL went public at the end of 2019, and IPO’d at $22. It sat there for a while before taking off, and currently trades ~$178. Of course, Payoneer has to continue executing, but I mention for some context.

From a macro perspective, the current global payments market is $26T in volume, and with more of the world coming online, the tailwinds for this sector remain very strong. And the fact that right now you can get in below what the PIPE investors paid, it is a bit of a no brainer. Interesting side fact - Israel’s incoming Prime Minister Naftali Bennett was also an early investor in Payoneer!

Phew, that’s all from me today. If there are any typos, please forgive as I may or may not have been a little hungover from one too many birthday drinks last night (week…). Sshhh 🥴🤫

Have a great week ahead!