SPAC Boom! (Part 3) Different Stages of SPAC

 
Would like to add up some point that I've ommited in Part 2.

After mentioning about the risk of investing is great, its important to know that the risk of investing in the mother shares of SPAC was just about 10% of the IPO price. This is because of the 90% will be given back if the SPAC failed to acquire any assets in 3 years time. Only warrant holder will suffer the most if they failed to acquire as the warrant holder are not allowed to convert to mother shares if they SPAC failed to make any acquisition.

Different Stages of SPAC
 There are 5 different stages of SPAC for small fish like you and me. Each stage provides U a different theme as well as the return.

 The Initial Stage
This is the stage where the SPAC looking for money and this is the IPO Stage.

Looking at the past, the very 1st  SPAC in Malaysia wasn't really doing well at this stage as Hibiscus was only able to get a total of RM235 million as initially looking for about RM300 million from the IPO. This was due to the lack of knowledge from the Investors as this was the 1st SPAC and the investors are too afraid of new thing and adopt "wait and see" strategy.
(quoted from http://www.theedgemalaysia.com/business-news/184264-hibiscus-to-test-investors-reception-for-spac.html)

2nd SPAC CLIQ ENERGY wasn't too bad. They targeted RM150million to RM500million but gets only RM363.5 million.
(quoted from http://www.thestar.com.my/Business/Business-News/2013/07/22/cliq-energy.aspx)

3rd SPAC SONA Petroleum currently the best among the all as the company had successfully raised RM550 million from IPO just like what they targeted.
(quoted from http://www.theborneopost.com/2013/07/31/sona-petroleum-makes-successful-debut-on-bursa-malaysia/)

The Asset hunting Stage
This is the stage where SPAC is loaded with $$ and now its time to lookfor good asset to acquire. This is 1 of the stage that able to create Castle in the air for the investors or some will call it the Price to Dream. This helps to explain why the share price of CLIQ and SONA is higher than therir listing price. Sona is in this stage now.

Found the Asset
After able to look for the Asset that they wanted to invest in, they will start to evaluate and do all sorts of research making sure that they are not investing in a lousy asset which gonna ruin the whole company as well as the reputation of SPAC. According to the management team, CLIQ is under this stage where they are looking at 5 oil and gas asset and evaluate whether which to go. 

Purchase of Asset & EGM
After those evaluations and quality assurance, the company had decided to invest in such asset. Due to the rules and regulations, the SPAC will have to conduct an EGM in order to get the approval from the shareholders before purchasing the asset. The SPAC will only able to purchase the asset after getting approval from their shareholders. 

Dig for BLACK GOLD
It's the time for seven little dwarf to do their job! We dig dig dig dig dig dig dig dig dig (reminding me about the song that the Seven little dwarf in the story of Snow White) Its the time we Dig our Oil Field and pray hard for the Black GOLD to be found soon! Hibiscus is currently at this stage and I think that they are about to hit the pot after listed for 2 years. Maybe it's a good chance to join the boat again? 

Hitting the POT!
This is the place when the company get their 1st drop of OIL!!! What do U think when they hit oil? Personally I think thats where the company will turn from a dream to a reality. Anyway, the share price of the company has big probability to move up to what it should be as it is able to produce profit for a long period until the oil field dry up.

Personally, I think Hibiscus will be the 1st SPAC to hit the pot as they are the 1st to get listed. By looking at the share price movement, I think there are something brewing in the company, have they got their 1st drop of oil? Let's see what will the management tell you on their AGM later. It's worth to take a look at their share price movement later as they might have good news to announce on their AGM. Let's get our finger cross. 

On the other hand, is CLIQ close to striking any asset acquisition deal? Ermm.. It's interesting, as the management had mentioned that they were evaluating which is the best to acquire. I do think that it will be great if they acquire an oil field which close to production as we will not get our neck long for their  prouction. Anyway, I think if you don't mind locking your money down for about 6 months, CLIQ will be a good choice as it closed at RM0.69 which is close to the 90% of the listed price which is RM0.75*0.9= RM0.675. It's quite a safe bet!

Hibiscus might be close to their 1st drop of oil, CLIQ might be close to their 1st acquisition. The issue mentioned above deem to be the factor that will drive the price to go up in near future. Which 1 do you think will come 1st? Who will be your choice? Good Luck and Huat ah!

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