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THE DECLINE OF THE SPAC
What is a SPAC?
A SPAC, or a Special Purpose Acquisition Company, is a company that has no commercial operations and is formed strictly to either:
- Raise capital through an Initial Public Offering
- To merge with or acquire a company
How does it work?
A SPAC is usually formed by sponsors or founders who inject the initial cash. Their early investment allows them to acquire ordinary shares and warrants, which enables them to purchase shares at a favourable price when the company is known.
The SPAC is then listed and can begin its search for a suitable target. Once a target is found, shareholders vote on the acquisition. If approved, further funds may be raised.
Once the takeover is approved, the SPAC will change its name to the target’s. Effectively, the private company has ‘reversed’ into the cash shell and gained its public listing.
This summary doesn’t include the depth one needs to fully understand the process.
What are the advantages and disadvantages?
SPACs allow companies to be listed quicker than the conventional process. The company might also get more bang for their buck, with SPAC acquirers having a limited time window (two years) for making a deal.
This risk for the investors is that their investment could be massively overhyped due to the lack of disclosure in a typical deal. The SPAC might also be a bubble. In September 2021, 70% of SPACs that had their IPO that year were trading below their offer price.
A Case Study
The second-hand car dealership, Cazoo, went public via SPAC in 2021. They chose to accelerate their listing by going public on the New York Stock Exchange. After an initial valuation of $8bn, the company is now worth 80% of that.
Why is this relevant?
Despite SPAC’s existence for a long time, 2021 was the ‘Year of the SPAC’. 613 SPACs came to market, compared to 247 the year before and 59 in 2019. In 2022, the picture looks bleak so far. A mere 68 SPACS have happened this year (up to May).
The SPAC boom kept M&A lawyers incredibly busy in 2021. Late nights, seven-day weeks and a lot of coffee. With the SPAC declining, the question becomes, what is the next boom?
Article written by Avishai Marcus
PALANTIR AND THE NHS
Palantir is a US extensive data analytics publicly traded company founded in 2003 and, at its inception, built software for US intelligence agencies such as the CIA. However, its range steadily permeated the commercial sector leading to the company’s development of two primary software platforms: Palantir Gotham and Palantir Foundry, for defence and commercial use respectively.
The usage of its software products extends to 40 industries, including telecommunications, energy, and healthcare, across 150 plus countries. Notable recipient companies include Amazon, IBM, and Airbus. Palantir also partners with US defence institutions including the Army and the Navy.
Its presence in healthcare data management has led it to NHS England as the current NHS’s analytics provider since the Covid–19 pandemic on a rumoured two-year, £23 million contract commenced on 12 December 2020.
In early April 2022, The NHS announced its plans to develop a Federated Data Platform (FDP), which, according to digitalhealth, is an ‘essential enabler to transformational improvements across the NHS and will be an ecosystem of technologies and services.’
The FDP, a £240 million project, will manage data received from thousands of NHS patients on elective waiting lists and data situated around five primary uses as follows:
- Population health and person insight.
- Care coordination.
- Elective recovery focusing on trusts.
- Vaccines and immunisation.
- The supply chain.
Palantir is the touted commercial front-runner for the lucrative five-year £360 million open procurement contract to be awarded in November 2022, with an option to extend the contract for a further two years.
However, it would appear Palantir is not the ethical front-runner many would desire to associate with the NHS, evidenced by, for instance, the disdain for the company’s co-founder Peter Thiel’s support of former US President Donald Trump’s ideals. Also, it is alleged that Palantir was involved with the Trump Administration’s US Immigration and Customs Enforcement (ICE) controversial detainment of Mexicans along the US – Mexican border by building software systems to help manage those detainments.
For the most part and because of the concerns about the company’s ties to security agencies and the allegations that the company builds ‘spy tech’ software for malignant use on the general population, according to the Financial Times, the likelihood of Palantir securing this lucrative contract has ‘prompted privacy activists and some within the NHS to voice Palantir’s suitability to run national health systems as well as the dangers of the NHS relying on a single private company for its key functions.’
Palantir was also subjected to a well-documented offensive launched by the legal firm Foxglove, which campaigns for transparency on government contracts, in the form of a judicial review on behalf of openDemocracy, an independent media platform, based on claims that NHS England was neglectful in its consideration of the potential GDPR risks to NHS patients when it awarded the two-year contract to Palantir during the pandemic.
Further inflaming the controversies surrounding Palantir and perhaps unintentionally so, the company is reported to have hired top NHS specialists, including Indra Joshi, the former head of artificial intelligence for the NHS and Harjeet Dhaliwal, the former deputy NHS England data chief, in its bid to secure the FDP contract, prompting accusations of a ‘revolving door between government, NHS and Palantir.’
However, in defence of Palantir, it is said that the Palantir can manage data concerns on a grander scale owing to its extensive and supposedly exemplary track record in the sectors from which Palantir garners significant criticisms in the first place. Furthermore, the public need not fret as the NHS remains the data owner.
Given the relatively large number of activists already campaigning and willing to campaign against the award of such a lucrative contract to Palantir, perhaps the government ought to take greater heed of those concerns and tread carefully during the procurement campaign between July and November 2022.
Indeed, no matter how seemingly far-fetched, mass opinions cannot always be wide of the mark.