Takeaways from Singapore’s landmark SPAC deal and its target company, 17Live

Vertex Technology Acquisition Corporation (VTAC) was the first special purpose acquisition company to list on the Singapore Exchange (SGX) in January 2022. The SPAC firm has raised around US$148 million.

VTAC, which is sponsored by Temasek-backed VC fund Vertex Holdings, is now also the first to declare an acquisition.

Earlier this week, the company announced a proposed acquisition of livestreaming platform 17Live Inc.

Image credit: Tech in Asia

Pending approval from SGX and VTAC’s shareholders, the deal will value the merged firm at roughly S$1 billion to S$1.16 billion (US$730 million to US$846.8 million).

The market reaction so far leans positive, with VTAC’s shares trading up by 2% since the announcement.

Previously known as M17 Entertainment, 17Live had originally planned to go public in 2018. But that was abruptly canceled on the day of the IPO itself after one of its investors failed to pass the know-your-customer process.

See also: M17’s ill-fated IPO: CEO reveals all

This time, the investment banking units of DBS and Credit Suisse – the joint financial advisers for the merger – will want to avoid any similar surprises.

Here are five key takeaways from the announcement.

1. Earning cash from virtual points

17Live is a livestreaming platform that primarily earns revenue by selling virtual points.

Users can buy virtual gifts to support their favorite streamers or virtual livestreamers (also known as V-Livers) via these points. V-Livers are streamers who prefer to use digital avatars instead of their actual faces.

The earnings are split with creators, who broadcast content related to music, education, and cooking, among other topics.

Another source of revenue is in-app games. These are casual or interactive games that users play – sometimes together with the streamers – while watching livestreams. Users can purchase game equipment and tools while playing these games.

2. US$18 billion TAM in 2027

3. Revenue fell in 2022

4. Premium valuation

5. Potential conflict of interest?