Carousell and L Catterton halt SPAC merger talks amid shaky market

Carousell and
Image credit: Carousell

Singapore’s online classifieds marketplace unicorn Carousell cut off SPAC merger discussions with American private equity company L Catterton Asia Acquisition Corp. due to current market volatility.

L Catterton failed to reach an agreement with the classifieds platform, despite Carousell’s conduct of due diligence for months. The supposed combined entity was estimated to be worth $1.5 billion.

The stock market rout also made the arrangement of the private investment in public equity (PIPE) even more difficult. For five weeks, L Catterton’s acquisition entity shares have fallen to their lowest values, according to Bloomberg.  

Carousell and L Catterton reportedly began SPAC merger talks in January. Two months later, the US Securities and Exchange Commision (SEC) proposed rules to enhance disclosure and investor protection relating to SPACs, shell companies, and projections.

“Functionally, the SPAC target IPO is being used as an alternative means to conduct an IPO. Thus, investors deserve the protections they receive from traditional IPOs, with respect to information asymmetries, fraud, and conflicts, and when it comes to disclosure, marketing practices, gatekeepers, and issuers,” SEC Chair Gary Gensler said in a statement at the time.

Since its founding in 2012, Carousell has acquired Singapore e-commerce service provider Ox Street, classifieds firm 701Search, mobile marketplace Duriana, car app Caarly, and personal safety device app Watch Over Me. Recently, Carousell acquired Singapore’s largest online fashion thrift store Refash.

Deals activity such as M&As, private equity, and venture financing deals in APAC has been on a 29.4% decline in April 2022 according to GlobalData. The total number of deals is lower than this year’s first quarter monthly average. Singapore in particular witnessed a decrease in deals volume by 36.2% last month. Month-on-month declines were witnessed in all types of deals. M&As decreased in deals volume by 30.9%, private equity by 32.9%, and venture financing deals by 28%.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Many of the APAC countries are witnessing inflation like situation while some are still struggling to overcome the effects of COVID-19 lockdowns on the economies.”

Despite the pandemic causing a downtrend in most industries, the total value of mergers and acquisitions in Singapore reached approximately $198.9 billion in 2021, which is 29.7% higher compared to the previous year. It is also the highest recorded total value in the past nine years.

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