Malaysia suddenly has become a land of SPAC. Firstly, there were these petroleum SPAC, in the form of Hibiscus and Cliq. Well the success so far is in the share price hence capital appreciation than anything else. A few more are coming. The beauty is that of course none of them are making money right now, and again the beauty of the story is that we are supposed to wait. These are long term investments. If we are not careful, these investments are going to be long shot for success, rather than long term investment. And the beauty is that, people are willing to wait through the SPAC story but not any other stocks that are in the market already.
How is it going to be successful? A SPAC is a way to raise capital for a team of supposedly professionals in what they do and well professionals are supposedly to be paid well. Another way of calling it, they are going to be expensively paid people - I presumed so.
A consumer based company FMCG or something close to that is supposed to be a business that is built to last. It will take time to be built, a lot of execution, and perseverance. Through this method, a brand is built, using lots of manpower, time, money and maybe more importantly perseverance and luck. It is not supposed to be using a bunch of expensive people, to do the selling and then what? Maintain the team, use up people's funds and we are supposed to be trusting for it to hopefully do well in the long term future.
If the business is to be built this way, it is not through a SPAD but rather private equity or venture capitalists. Sometimes, a petroleum SPAC I can understand where they are investing into a "make or break" oilfield or technology or something like that. Engaging professionals would probably allow us to reduce that probability of failure.
But again in F&B? C'mon. What are they going to do? Buy some businesses? Things like buying businesses to compete against the likes of Coca-cola, Pepsi, DKSH, Harrisons and some private companies? If this is the case, my question is why not turn them into a closed-end fund? Just purely investments. Private Equity rings the bell?
If on the other hand, buying start-ups is the idea. That's even worse. How long the investor is going to wait, if return from investment is to be used as a benchmark rather than just capital appreciation.
I am just wondering, first the Second Board. When it was a ring for syndicates to play and many businesses failed, it was abolished. Then MESDAQ (which later renamed to ACE). We sort of failed although created few really good businesses. Then the Red Chips stocks. We are failing now, after again the experiment. Then the SPACs, 2 good stories so far, in terms of share price but nothing else. Do we want more with an absurb plan of an F&B team of superstars?
Is it a way of just creating stories after stories without much to show success of. Where has the traditional mindset of proving that you are successful then the reward goes rather than the preference for get rich quick scheme? I surely am not favoring the black cheque for SPACs...
