ReNew Power will get ‘blank cheque deal’ for Nasdaq itemizing

Renewable vitality producer ReNew Power on Wednesday introduced an settlement to merge with RMG Acquisition Corp II, a blank-cheque firm or a particular objective acquisition firm (SPAC). The merger of ReNew Power with RMG Acquisition will consequence within the former’s itemizing on Nasdaq and gross money proceeds of round $1.2 billion.
The deal is the primary involving an Indian firm through the newest increase in SPAC offers which have continued in 2021 after witnessing a document 12 months in 2020. In addition to ReNew Power, on-line grocery platform Grofers can be reportedly in superior phases of exploring a SPAC deal.
A SPAC, or a blank-cheque firm, is an entity particularly arrange with the target of buying a agency in a selected sector. The goal of this SPAC is to boost cash in an preliminary public providing (IPO), and at this cut-off date, it doesn’t have any operations or revenues. Once the cash is raised from the general public, it’s stored in an escrow account, which could be accessed whereas making the acquisition. If the acquisition just isn’t made inside two years of the IPO, the SPAC is delisted and the cash is returned to the traders.
What makes SPACs engaging to traders, regardless of them primarily being shell firms, are the folks sponsoring the blank-cheque firm. For instance, in case of ReNew Power, the SPAC RMG Acquisition Corp II — which raised $345 million in an IPO final December — has additionally been backed by marquee traders similar to BlackRock, BNP Paribas, Chamath Palihapitiya, and others. These traders participated via a personal placement, by which the remaining $855 million was raised.

Globally, distinguished names similar to former NBA participant Shaquille O’Neal, former TikTok CEO Kevin Mayer, Michael Dell, Vinod Khosla, Arianna Huffington, and so on. have participated in SPACs. In India, on-line journey company Yatra.com and Videocon D2H have listed overseas via SPAC offers in 2016 and 2014, respectively.
However, a contemporary push to SPACs has come since final 12 months. According to information sourced from SPAC Insider, a portal that maintains a document of SPAC offers, of the 645 such IPOs by blank-cheque firms since 2009, 248 occurred in 2020 and 171 in 2021 to date. The gross proceeds raised by SPACs in 2020 amounted to over $83 billion.
“It is a fresh way of thinking of how to structure and exit versus an expensive IPO. The money is already raised by somebody who specialises in that area, and is now picking those assets and building on them,” Sunil Okay Goyal, MD, YourNest Venture Capital, mentioned.