Motivation And Effectiveness Analysis Of Chinese Concept Stock Listing Through Special Purpose Acquisition Company

In recent years,innovative and high-growth enterprises have been emerging in China,and the development trend is unstoppable.However,the development and growth of enterprises need high capital investment,so they have sought to go public to raise funds.On the one hand,domestic listing requirement is higher,with strong policy,attaches more importance to the company’s past profitability and net asset scale,while overseas capital market access conditions are more relaxed,so it is easier for Chinese enterprises to reach the threshold for listing.On the other hand,the overseas capital market can not only provide higher financing,but also enhance the company’s visibility,attract the cooperation of domestic and foreign companies,and enhance the core competitiveness of the company.Therefore,many enterprises choose to go overseas for listing.For some smaller enterprises,due to their own development,it is often difficult to go public through the traditional IPO method,and they can only choose the indirect listing method.SPAC means Special Purpose Acquisition Company.Listing through Special Purpose Acquisition Company(referred to as SPAC merger and acquisition listing)has the advantages of shorter time,lower financing cost and higher success rate.In 2020,SPAC has a blowout development in the capital market.By October 2022,the United States,as the largest SPAC market,listed SPAC accounted for 77%of newly listed companies that year,making it a hot listing method.SPAC is more inclined to low-market capitalization companies in high-growth industries,and there are no rigid requirements on the company’s historical performance and net assets,so it is a new way for Chinese companies to try to go public.As one of the earliest companies to enter the live streaming industry,Scienjoy followed the footsteps of Huya,Douyu to go public overseas in 2020,becoming the only company in the live streaming industry to go public bu the way of SPAC M&A.This thesis takes Scienjoy as the research object,takes the process of Scienjoy going public through SPAC as the entry point,based on financing constraint theory,optimal financing theory,synergistic effect theory and market power theory,and makes an in-depth analysis of the motivation of Scienjoy going public through SPAC model.This thesis also compares and evaluates its strategy implementation,market expansion,business performance and stock market reaction before and after listing,and finally draws research conclusions and insights from the research.The purpose of this thesis is to further enrich the case studies related to the motivation and effect of China Concept stocks listed by SPAC M&A,so as to provide reference for Chinese enterprises to choose SPAC mode.It is found that after the listing of Scienjoy through SPAC mode,the company successfully developed the overseas market,and realized the synergy effect through the M&A activities.After the implementation of a series of strategies,the market expansion had obvious effects:the user scale grew rapidly,user paying rate and market power increased.Finally,the financial benefits are reflected in the enhancement of solvency and rapid growth of earnings.Judging by the stock price action,the market also takes a positive view of Scienjoy.However,at the same time,the SPAC M&A listing mode also has risks such as control transfer,valuation discount,legal compliance and litigation,which need to be noticed by listed companies.Therefore,Chinese enterprises can try to realize the purpose of listing by SPAC mode,but also pay attention to its potential risks.Chinese A-share market can also introduce SPAC mechanism in an appropriate time to help Chinese enterprises go public and realize further development.