RE: Just found Pineapple Power - Question6 Jan 2021 16:32
In all honesty I had alot of questions myself, why would someone use cash shell like Pineapple Power and not just float themselves as an IPO?
Why float atall? What are the benifits?
Why use a tiny new company like Pineapple Power rather than a much bigger shell with lots of cash and a trading history, IE a failed business that is still listed with lots of reserves?
Answers:
1, Cost/time/complexity - For an existing private company to do an IPO and list is very expensive, time consuming and complex with alot of hurdles to jump through. IMO cash shells are more like a loop hole that just never got closed, they give private companies a short cut to public listing with very little time effort or cost.
2, Private companies are very limited in scope and target market for raising capital, a listed company can raise capital much faster for better rates at a much fairer equity stake. Listing also allows directors who may have invested years in a company to finally realise a sizeable reward, when its listed they can start selling their shares on the open market and take advantage of the current pro-green sentiment.
3, RTO STILL involves paperwork, the smaller/cleaner/fresher the cash shell the better. In the RTO the history of the cash shell adds baggage, potential liabilities, delays and hurdles. An established company falling back to a cash shell with years of trading history is not what you want.
Changes nothing though. Either they find and agree terms with a suitable target or they dont, there is risk involved, if they are successful however the SP will be multiples. Personally I am optimistic, there is a big market for suitable Cash Shells, even though PNPL are targeting VRFB companies they could target any company, very unlikely they dont actually RTO in the near future.
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