Pegasus Asia - SPAC

Pegasus Asia is offering 25.6m units at $5 each. Each unit will comprise one share and half a warrant. 25m Units will be via placement and 600,000 Units will be via a public offer. The public offer will close on 19 Jan at 12pm and will commence trading on 21 Jan 2022 at 9am. The market cap will be around $150m.  There is an over-allotment option of up to 4m Units. This will be the second SPAC after VTAC to be listed on SGX.

While I like the logo, this Prospectus is a "wasted" opportunity

Compared to the VTAC prospectus, this issuance paled in comparison.  Pegasus Asia failed to make use of the gatefolds to better explain their story and intent whereas VTAC had 7 pages of colorful infographics to tell its story, so kudos to the VTAC team!

Given the SPAC has no businesses to evaluate and is basically a shell company with a 24 months timeline to acquire a business, let me highlight the few important points for Pegasus Asia.

Sponsors

The Sponsors are Tikehau Capital, Financiere Agache, Diego De Giogi and Jean Pierre Mustier. While Paris is a city of love, there is no romance here since I am not familiar with any of the Sponsors even though Temasek has a small 5% stake in Tikehau Capital. Tikehau Capital is an alternative asset management group with Euros 30.9m AUM as of 30 June 2021. Financiere Agache SA is controlled by Agache, the Arnault family holding company that owns Christian Dior and is a controlling shareholder of LVMH. Financere Agache and LVHM jointly owns 40% of L Catterton, a private equity firm with approximately $30b equity AUM. Messrs Diego De Giorgi was previously with Goldman Sachs and has advised over 100 acquisitions, including the IPOs of Ferrari and Moncler while Jean Pierre Mustier had over 35 years of experience in banking and financial services, both with extensive experiences in Europe. 

Focus Areas

The SPAC will try to acquire a company in technology-enabled sectors, such as consumer tech, financial tech, property tech, insurance tech, health tech and digital services in Asia Pacific. Basically it means any businesses with a "tech angle". 

The prospectus had 3 case studies to illustrate Tikehau's experiences but they are all European based companies and this begs the question whether the experiences of the Sponsor are more suited for European businesses rather than Asia Pacific. The Asian examples they cited as Prop-tech is "JustCo" which reminds me of WeWorks, which isn't a tech company and Fin-tech investment in Judo Bank, a "challenger bank" in Australia. 

Important timeline - 45th day from Listing Date

It is important to note that the shares and warrants will begin separate trading 45th calendar day from the listing date, expected to be 7 March 2022 and this will occur automatically.  Each warrant is exercisable to subscribe for a new share at $5.75 each for a certain period and can be redeemed by the Issuer at its discretion during the Exercise Period. 

Board of Directors 

I have looked at the credentials of the board and agree that they are diverse and have the relevant experiences and expertise although I am surprised by their choice for the chairman role as there are better qualified board members, such as Chu Swee Yeok from EDBI who has more "buy side" direct investing experiences.

Lack of Cornerstone Investors

Compared with VTAC and Novo Tellus, I don't see the "who's who" participating in this IPO. This lack of cornerstone investors to me is critical for post listing market activities. To distribute all the shares to high net worths from UBS may not be the best strategy and you don't see "long-only" asset managers participating in this issuance.

Mr IPO Chilli Ratings - 1 Chilli

Frankly the Chilli Ratings is not "relevant" or useful as it is more a reflection of what I think about the Sponsor. Since I have given VTAC a 2 chilli rating, Pegasus Asia is a shade lower for me for a few reasons:

1.  Tikehau and the Sponsor's experiences are more in Europe than Asia. If they had put their business focus as Europe tech businesses, I would have rated them much higher and given them more credibility. I am not sure why they need to limit their focus to Asia Pacific
2.  Temasek is only a small shareholder in Tikehau, so I don't expect much halo effect here. In addition, Temasek did not participate directly in this issuance and there are no notable cornerstone investors in this issuance

They are competing to be one of the first SPACs here and if I have to choose, it will be VTAC over Pegasus Asia but the "dark horse" with real track record and relevance (buyout experience) could actually be Novo Tellus, so watch out for the review when the IPO is launched.

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