An Introduction to the Ignyte Acquisition Corporation (NASDAQ: IGNY)
The IGNY SPAC brings a quality offering to the Life Sciences industry. A surprisingly meagre offering but a fantastic sponsor and team member composition indicate a great future for the company.
Initially entering the open markets on January 28th 2021, with a surprisingly low offering of $50 million. In comparison to most Life Sciences entrants, this is definitely on the lower end. Successfully ending the offering on February 2nd 2021, after a successful offering. Securing $57.5 million in the trust.
Each of the $10 units composed of a standard share and a half-share redeemable warrant. Since the units split, that share price has not been faring well. However, the company is yet to make any official announcements. Investors are keen to hear more from the Ignyte Acquisition Corporation.
Sponsor Analysis & Context
The listed sponsor is the Ignyte Sponsor LLC and the sole underwriter of the transaction is EarlyBird Capital Inc. Not particularly renown but not necessarily considering the sub $100 million trusts. However, the deal flow does appear to be particularly strong considering the heavy ties with the Upper Management and the extremely well-established investment bank, Ladenburg Thalmann & Co.
This well established and highly influential Investment bank has been listed by multiple over-the-counter markets. A member of the New York Stock Exchange, the company offers a wide array of financial services. Ranging from investment banking to capital markets products and services, including proprietary equity research and a fixed-income trading desk.
In relation to the SPAC process, although the IGNY SPAC is the first direct offering from the company. Ladenburg Thalman is a well-established underwriter and sponsor to multiple SPACs previously. Having even undertaken the role as sole-bookrunner over a number of prior offerings.
It is clear to see that the IGNY SPAC is potentially the first of many acquisition companies established with close ties to Ladenburg Thalman. They have clearly identified an emergent market trend and sought to capitalize. The sort of connections, networking and deal flow that an investment bank with over 100 years of experience can offer is truly unrivalled.
Sitting as both chairman and Co-CEO of the company. Mr Rosenberg is well connected and brings over 20 years of experience within the investment banking sector to the company. As of 2011, Mr Rosenberg has sat as both Co-President and Co-CEO of the IGNY SPAC sponsor, Ladenburg Thalmann & Co.
Through this company, Mr Rosenberg has worked alongside multiple SPACs in the capacity of a leading underwriter. It is clear that he has since seen the multiple benefits of the process alongsite the quality deal flow that goes through an investment bank. The creation of the IGNY SPAC was only a matter of time.
Furthermore, Mr Rosenberg has managed over 1000 public offerings and raised in excess of $75 billion. Across a wide range of companies, primarily within the small to medium cap size. Also maintaing a large list of experience through the M&A proess.
Sitting as Co-CEO of the IGNY SPAC. Mr Strupp has a clear focus as a dedicated healthcare investment banker. Having spent in excess of 27 years within the sector across a number of Investment banks. Currently holding the position of Managing Direction as well as the Head of Healthcare Investment Banking at Ladenburg Thalmann & Co.
Through leading this department, Mr Strupp has overseen a wide variety of Business transactions related to the Healthcare sector including M&A advisory, equity and equity-linked offerings, private placements and fixed income transactions. His brilliant work at the firm has helped it establish a market-leading practice advising biotechnology companies in reverse merger transactions.
Sitting as the CFO of the IGNY SPAC, Mr Kaplan maintains a close relationship with the sponsor. Sitting as the Managing Director as well as the Head of the Capital Markets as of 2011. Co-Heading the Investment banking sector of Ladenburg Thalmann, Mr Kaplan has a large amount of experience with Blank Check companies or SPACs. Considering the company has a fantastic reputation as a solid underwriter.
Previously, Mr Kaplan maintains a noticeable level of experience across the healthcare services industry. From 1999 to 2004, Mr Kaplan was both Co-Founder and Partner of River Capital Partners, this healthcare-focused M&A advisory firm operated successfully under his guidance.
Largely due to his experience as VP of Healthcare Investment Banking Group of Prudential Securities from 1996 till 1999. Alongside his associate position at Jefferies & Company (1993 – 1996) maintaining a close focus on Healthcare M&A.
Having managed over 500 public offerings, including IPOs. As well as advising on numerous merger and acquisition transactions, there are fewer more qualified to sit as CFO of a Life Science directed SPAC.
Targeted Sector & Market Criteria
It can be clear to see from the assembled upper management and directors that the IGNY SPAC aims to focus heavily on the life sciences, biotechnology and healthcare sectors. Traditionally, acquisition corporations looking to seek targets into this sector bring trusts in excess of $100 million.
This is perhaps indicative of a potential PIPE deal or of clear talks and a specific target, yet to be publically announced. However, a closer look at the IGNY SPAC paints a more interesting picture.
We offer a target business a variety of options such as providing the owners of a target business with shares in a public company and a public means to sell such sharesForm S1 – IGNY SPAC- SEC FILING
The company has identified an increasingly growing opportunity across the life sciences and biopharma sector. Citing the: “discovery and development of revolutionary medical technologies, the ageing population, as well as improvements in healthcare-related services” as the primary catalysts.
The strangest facet of this offering is the incredibly reduced trust fund. Many other Life Sciences SPACs citing the development of medication and new technology undergo substantially larger offerings. However, the IGNY SPAC addresses these concerns by looking to focus on “affordable healthcare” as well as the potential within “developing nations.”
Across these two criteria, the IGNY SPAC further goes on to highlight the Life Sciences fields that focus on DNA sequencing, genome editing tools and computational power.
Furthermore, the company is seeking a target with accessibility to committed capital. This is considered a major factor in the stock value through a reverse merger transaction.
Alongside a target company with a scientifically differentiated or diversified product pipeline. Perhaps the aims of the IGNY SPAC seem too lofty? The desire to avoid risky, early-stage assets and seek multiple late-development stage or commercial-stage assets with merely $50 million seems highly unlikely.
Deal Flow Analysis
The arrangement of the IGNY SPAC is truly remarkable. With a brilliant link to the Healthcare investment sector, the management teams bring over 80 years of collective experience from the sector.
The growth-focused investment bank has a long list of experience with the IPO and emergent growth aspect of many businesses. Having raised in excess of $34.5 billion in capital for its clients as well as currently maintaining in excess of $3.1 billion in assets. The most notable Form 13F holdings include the highly recognizable Amazon and Apple.
In regards to VC and relevant financial transactions, the company has handled multiple Life Science companies over the reverse merger process. Advising around 13 such transactions, successfully closing 6 across 2020.
A closer look at the investments of the company in the life sciences sector leaves a lot to be desired. Tending towards Post-IPO equity most recently with a $34.5 million investment in Intec Pharma (Israel-based drug development company).
No stranger to the Acquisition aspect, the Sponsor has been involved with as many as 7 Acquisitions. Primarily in the Financial and Fintech sectors. Choosing only to undertake 2 exits.
Regardless of the obviously fresh entrance into the direct SPAC process, having underwritten many blank check companies previously. Ladenburg Thalmann is clearly well-known across multiple sectors with a well-established Life Sciences department and Deal Flow availability.
IGNY SPAC In Summary…
The latest offering into the Life Sciences sector seems fairly quality on all fronts. Clearly a very respectable request and a successful IPO. Investors are eagerly awaiting further information.
A fantastic sponsor with unbelievably close ties to the Upper Management of the IGNY SPAC. Although the team does have an unbelievable level of experience through both the reverse merger and Life Sciences sector, the lack of SPAC experience is noticeable. Although the many experiences as underwriter to multiple SPACs is certainly relevant.
Even the assembly of directors seems well-suited to the direction of the IGNY SPAC. However, the glaring issue is the unbelievably low asking amount, the half warrant as well as the mention of capital flexibility (share options for the potential target).
This all indicates towards heavy share devaluation post combination and many novice SPAC investors will certainly get taken advantage of. Regardless, the deal flow seems solid and the assembled team is certainly impressive.
As to whether the Ignyte Acquisition Corporation burns a hole in the pockets of its investors, remains to be seen!