Top 3 SPAC Targets – Latin America


Top 3 SPAC Targets – Latin America

SPACInsider contributors Anthony Sozzi and Sam Beattie this week compiled their three favorite potential SPAC targets among Latin American companies. We look at why they are compelling and why each could be a fit for a blank-check merger.

While the market’s turn against growth stocks over inflation concerns continues to burn itself out in the US, now may be a good time for SPACs to look at targets in other markets.

Several have already pointed themselves towards Latin America with LatAmGrowth (NASDAQ:LATGU) IPO’ing this week, joining MELI Kaszek Pioneer Corp. (NASDAQ: MEKA) and Global Technology I (NASDAQ:GTAC) among others searching in that geography. At least two other SPACs on file to IPO – Patria Latin American Opportunity (NASDAQ:PLAO) and L Catterton Latin America (NYSE:LCLA) – have similar ideas.

SPACs may also have some added competitiveness in the region as it is now expected to see slower economic growth of 2.4% for 2022 after a 6.5% jump in 2021. Should this slowdown extend to the availability of capital, there are bound to be more willing takers on SPAC pitches.

The attraction should be mutual, because in a desert of de-SPAC plays that have clearly and consistently “worked” in the current market, Latin American deals have roundly performed well. Finishing Thursday at $22.84, home goods-maker Betterware de Mexico (BWMX) currently holds the ninth-highest share price among de-SPACs that completed since 2010.

It closed its deal with DD3 in March 2020, while Latin American pharmaceutical manufacturer Procaps (NASDAQ:PROC), which completed its deal with Union II in September 2021 closed yesterday at $9.50, which looks positively wealthy in January 2022.

This doesn’t mean that all that comes from the region turns to gold, but it is telling that both are relatively “boring” businesses compared to the typical SPAC targets. SPACs as an asset class could probably use some more boring, mature businesses in their portfolio at the moment, and Latin America is less picked over when it comes to matured IPO candidates than the US may be at the moment.


On that note, CargoX stands out as a play in logistics technology, which is a space far less crowded by venture funding in Latin America than the US.

Nonetheless, the Brazil-based company crossed into unicorn territory with its $200 million Series F in 2021. This raise also further internationalized its investor base. CargoX has counted Goldman Sachs (NYSE:GS) among its investors since 2017, but the Series F brought Tencent (HK:0700) and SoftBank (TYO:9434) into the cap table.

By providing a flexible cargo booking sorted digitally according to available loads in nearby trucks, CargoX has blazed a path of disruption that was already clearer to bulldoze given greater lag in technological adoption by its fragmented competitors.

The company has held its financials close to the vest, but announced it had notched $200 million in revenue 2018 and has only increased speed since, growing revenues by 73% through the pandemic while local peers were cutting back. By comparison, G Squared Ascend I (NYSE:GSQD) is working to complete a deal with US digital logistics firm Transfix, which generated $71 million in 2018 and expects $184 million in 2020.

This combination valued at Transfix at 3.8x its 2021E revenue, and if a SPAC could get a regional discount on CargoX, this could be lucrative indeed. Keep an eye on Pegasus Digital Mobility (NYSE:PGSS) for such a play, as it is searching for transportation targets with 12 months left on its transaction deadline.


Speaking of regional analogues, Mexico-based Clip may be the ticket for those that were hoping to see a SPAC deal bring Stripe or Block (NASDAQ:SQ) – formerly Square – to market.

Clip offers similar services as these American payments providers. But, its smallest swiping model, which is about the size of a pocket calculator, can take card payments supported by Visa (NYSE:V), MasterCard (NYSE:MA), Amex (NYSE:AXP), Apple Pay (NASDAQ:AAPL) among others. This design is ideal for Latin America’s high share of small and medium-sized businesses, and Clip may have potentially greater penetration potential in its neighborhood than Block is fighting for in North America and Europe.

Block is also down 58% since Halloween, presenting an interesting value opportunity for SPACs chasing Clip. With Block as the first stop in evaluating a price for Clip, the multiple is getting more attractive through the Nasdaq correction. Having IPO’d below its range at $9 in 2015, it had surged up above $100 since June 2020 and hit a high of nearly $300 last August.

The recent fall of it and its peers resets the tables for fintech valuations in a way that especially benefits those that have a less-crowded path to market growth in their respective regions. Clip has also attracted investment from Goldman Sachs and Softbank along with Google (NASDAQ:GOOG) and Ribbit Capital, which currently has a SPAC searching in Ribbit LEAP (NYSE:LEAP).


Among the few bright spots for de-SPACs in the present market are those that are feeding their investors literally.

Simply Good Foods (NASDAQ:SMPL), which went public via SPAC back in 2017 is still going strong, closing at $33.98 Thursday as are Hostess (NASDAQ:TWNK) and Utz Brands (NYSE:UTZ) at $20.49 and $15.72, respectively.

This could well be line one in a pitch to Chilean non-dairy milk-maker NotCo. Further supporting this argument is that NotCo competitor Oatly (NASDAQ:OTLY) was not well-served by its IPO process in 2021, pricing at $17 per share in May only to see a steady decline towards a Thursday close at $6.25 after a June spike up to $29.

NotCo secured a valuation of $1.5 billion in July 2021 primarily on the backs of its line of milks. But, this is differentiated from soy, almond and oat milk, which each have their production drawbacks and specific audiences. NotCo has made inroads with a plant-based milk made from sunflower oil, pea protein as well as pineapple and cabbage juice with varying amounts of added vitamins and gums to better mimic the consistency of cow’s milk.

If that sounds like an odd mix to stumble upon, it wasn’t by coincidence. NotCo has developed a proprietary AI technology it calls Giuseppe that matches animal proteins to their ideal replacements among plant-based ingredients. Giuseppe’s recommendations have seen NotCo develop an Impossible Burger competitor that is already being served in Chilean Burger Kings and the company is already expanding into plant-based mayonnaise and other meat categories.

A SPAC deal could see it turbocharge this R&D effort, and it could potentially find a helping hand from Agrico (NASDAQ:RICO), a $144 million SPAC hunting for AgTech targets in the Americas. It is led in part by CFO Robert Perez Silva who cut his teeth as the head of portfolio management at Ashmore Colombia, the country’s largest private equity fund manager.