The management company Zest has launched the first mutual investment fund focused exclusively on SPACs (Special Purpose Acquisition Company) listed on American stock exchanges. The fund, called Zest US Spac Fund, aims to exploit the revaluation of the securities of these vehicle companies listed on the Nasdaq or the New York Stock Exchange, systematically divesting before the completion of the “business combination”, ie the merger between Spac and the acquired company, which, as a result of the merger, automatically finds itself listed on the stock exchange.
«Since the beginning of 2021, about 80% of new listings in the United States have passed through a SPAC, where today there are 400 active SPACs, for a total capitalization of approximately 125 billion dollars. And another 69 Spacs are in the registration phase by the end of the first half, for a further 17 billion ”, explains Antonio Midolo, creator and manager of the Zest US Spac fund.
Spacs are companies that raise capital between private and institutional investors in order to be listed on the stock exchange and, subsequently, to identify an unlisted company to be acquired. In this way, the acquired company, once merged with Spac through the so-called business combination, automatically finds itself listed on the stock exchange, without going through the long and costly listing process Ipo (Initial public offering). The bottom Zest US Spac it is proposed as an innovative investment solution for liquidity, aiming, on the one hand, to conserve capital and, on the other, to generate returns characterized by low volatility and decorrelation from the markets.
Capital conservation is linked to the SPAC financing mechanism: the raised capital is kept in a segregated account (escrow account) and is invested in short-term US government bonds (3/6 months), as it cannot be affected until business combination. The shareholders of each SPAC can request the reimbursement of the entire capital invested at the general meeting, once this is called to authorize the business combination proposal. The extra yield is linked to the further possibility for the shareholders of the SPACs to sell their shares on the market, when their value exceeds the redemption value: in 2020, the American SPACs in search of a company to acquire average returns around 4% per year, while those who announced the business combination they recorded an appreciation of more than 30% compared to the placement price of the shares of the Spacs. “The objective of the fund is to diversify its investments in an equal-weighted basket of listed Spacs, with the aim of always exiting before the business combination»Adds Midolo. «When the value of the positions is higher than the redemption value, the SPAC shares will be sold on the market. While in the event of a flat or negative stock performance, the fund will ask for the repayment of the invested capital plus the interest accrued in the segregated account ».
The Zest US Spac fund will not invest in European Spacs, but only in companies listed in the United States, where in the last two years 45% of the new listings have passed through a Spac, reflecting the substantial benefits of a listing through Spac compared to listing. traditional. The Zest US Spac fund is a Luxembourg fund, qualified as Raif (Reserved Alternative Investment Fund), intended exclusively, by law and by nature, for an audience of institutional and qualified investors (so defined well-informed investors).
- Share value (Nav – Net Asset Value) calculated and published weekly
- Fund denominated in USD, classes (hedged) in EUR and in CHF
- Minimum Investment 125,000 USD / EUR / CHF
- Annual management fee of 1.2%
- Performance fee of 15% with “high water mark”, therefore calculated and realized only when the maximum of a new maximum value reached is exceeded.