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Investcorp Acquisition (IVCA) - 2022 Q4 - Annual Report
IVCAInvestcorp Acquisition (IVCA)2023-04-17 20:02

Company Operations and IPO - The Company has not yet commenced any operations and all activities from inception through December 31, 2022, relate to its formation and Initial Public Offering (IPO) [21] - The IPO generated gross proceeds of 225millionfromthesaleof22,500,000unitsat225 million from the sale of 22,500,000 units at 10.00 per unit, with an additional 33.75millionfromtheunderwriter′sover−allotmentoption[22]−TheCompanysold14,400,000privateplacementwarrantsat33.75 million from the underwriter's over-allotment option [22] - The Company sold 14,400,000 private placement warrants at 1.00 each, generating gross proceeds of 14.4million,alongwithanadditional14.4 million, along with an additional 1.6875 million from the sale of 1,687,500 warrants due to the over-allotment option [23] - The net proceeds from the Initial Public Offering and private placement amount to 259,606,250,whichwillbeusedtocompletetheinitialbusinesscombination[146]−Approximately259,606,250, which will be used to complete the initial business combination [146] - Approximately 2,150,000 will be available outside the trust account for working capital requirements, with offering expenses estimated at 1,000,000[105]BusinessCombinationStrategy−TheCompanyintendstofocusitssearchforabusinesscombinationtargetinIndia,particularlyinhigh−growthsectorssuchashealthcare,software,consumerservices,ITservices,andfintech[26]−TheCompanyaimstotargetcompanieswithanenterprisevalueinexcessof1,000,000 [105] Business Combination Strategy - The Company intends to focus its search for a business combination target in India, particularly in high-growth sectors such as healthcare, software, consumer services, IT services, and fintech [26] - The Company aims to target companies with an enterprise value in excess of 1 billion, emphasizing appropriate valuations and strong management teams [29] - The management team has extensive experience in sourcing, structuring, and acquiring businesses, which is expected to provide a competitive advantage in identifying suitable acquisition candidates [39] - The management team believes that their diverse experience and industry knowledge will create significant shareholder value through successful business combinations [40] - The company may pursue initial business combinations with affiliated targets, requiring an independent fairness opinion in such cases [43] Financial Reporting and Compliance - The company is subject to reporting obligations under the Exchange Act, including filing annual, quarterly, and current reports with the SEC [48] - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements [52] - The company will remain an emerging growth company until it meets specific revenue or market value thresholds, including total annual gross revenue of at least 1.07billion[54]−Thecompanyisa"smallerreportingcompany,"whichallowsittoprovideonlytwoyearsofauditedfinancialstatementsuntilcertainmarketvalueorrevenuethresholdsaremet[55]−Amaterialweaknessininternalcontroloverfinancialreportinghasbeenidentified,whichmayimpacttheaccuracyoffinancialstatements[167]RisksandChallenges−TheCompanyacknowledgespotentialimpactsfromglobaleventssuchasCOVID−19andgeopoliticaltensions,whichmayaffectitssearchforbusinesscombinations[24]−Thecompanymayfaceintensecompetitionfromotherentitiesinidentifyingandacquiringtargetbusinesses,whichmaylimititsabilitytocompletebusinesscombinations[45]−Theongoinggeopoliticaltensions,particularlyduetotheinvasionofUkrainebyRussia,mayadverselyaffectthecompany′ssearchforabusinesscombination[77]−Marketdisruptionsresultingfromgeopoliticaltensionscouldleadtosignificantvolatilityincommoditypricesandcapitalmarkets,impactingthecompany′soperations[78]−Thecompanymayfacebankruptcyrisksifitdistributesproceedsfromthetrustaccounttopublicshareholdersbeforeaddressingcreditorclaims,potentiallyleadingtoclaimsofpunitivedamagesagainsttheboardofdirectors[111]ShareholderRightsandRedemption−Theabilityofpublicshareholderstoredeemsharesforcashmaymakethecompanylessattractivetopotentialbusinesscombinationtargets[58]−Thecompanymaycompleteitsinitialbusinesscombinationevenifamajorityofpublicshareholdersdonotsupportit,asitcanseekshareholderapprovalorallowredemptionthroughatenderoffer[62]−Ifseekingshareholderapproval,thecompanyneeds9,703,126shares(37.51.07 billion [54] - The company is a "smaller reporting company," which allows it to provide only two years of audited financial statements until certain market value or revenue thresholds are met [55] - A material weakness in internal control over financial reporting has been identified, which may impact the accuracy of financial statements [167] Risks and Challenges - The Company acknowledges potential impacts from global events such as COVID-19 and geopolitical tensions, which may affect its search for business combinations [24] - The company may face intense competition from other entities in identifying and acquiring target businesses, which may limit its ability to complete business combinations [45] - The ongoing geopolitical tensions, particularly due to the invasion of Ukraine by Russia, may adversely affect the company's search for a business combination [77] - Market disruptions resulting from geopolitical tensions could lead to significant volatility in commodity prices and capital markets, impacting the company's operations [78] - The company may face bankruptcy risks if it distributes proceeds from the trust account to public shareholders before addressing creditor claims, potentially leading to claims of punitive damages against the board of directors [111] Shareholder Rights and Redemption - The ability of public shareholders to redeem shares for cash may make the company less attractive to potential business combination targets [58] - The company may complete its initial business combination even if a majority of public shareholders do not support it, as it can seek shareholder approval or allow redemption through a tender offer [62] - If seeking shareholder approval, the company needs 9,703,126 shares (37.5%) or 1,617,189 shares (6.25%) of the 25,875,000 public shares sold in its IPO to be voted in favor of the transaction [63] - The company will not redeem public shares if it would cause net tangible assets to fall below 5,000,001 upon completion of the initial business combination [66] - If too many public shareholders exercise their redemption rights, it may hinder the company's ability to meet closing conditions for a business combination [71] Governance and Management - The company has no material litigation or governmental proceedings currently pending against it or its management team [56] - The sponsor may prefer to complete a business combination with a weaker target to avoid failing to complete any business combination, creating a conflict of interest [88] - The initial shareholders collectively own 20% of the ordinary shares and may influence votes on amendments to governing documents [158] - The company may engage its sponsor or an affiliate as an advisor for business combinations, which may create potential conflicts of interest [131] - Conflicts of interest may arise as officers and directors are not required to commit full time to the company's affairs, potentially impacting the search for business combinations [197] Market and Economic Conditions - Changes in the Indian government's economic policies could adversely affect the attractiveness of potential target businesses in India [179] - The Indian economy may face substantial inflationary pressures, which could significantly decrease profitability following the initial business combination [182] - Risks associated with acquiring and operating a business in foreign countries include difficulties in managing cross-border operations and compliance with local regulations [183] - Exchange rate fluctuations may adversely affect the financial condition and results of operations if a non-U.S. target is acquired, as revenues would likely be received in foreign currency [188] - The company may be exposed to liabilities under the Foreign Corrupt Practices Act, which could negatively impact business operations and financial condition [189] Future Outlook and Considerations - The company may need to search for an alternate business combination if it cannot proceed with the current one due to redemption requests affecting net tangible assets [67] - The company may extend the period to consummate a business combination by an additional three months on two separate occasions, requiring a deposit of 2,587,500(2,587,500 (0.10 per share) for each extension [80] - If the company fails to complete its initial business combination within the prescribed time frame, public shareholders may receive only $10.30 per share, or less, and warrants will expire worthless [84] - The company may face challenges in obtaining additional financing necessary for completing its initial business combination, which could lead to restructuring or abandonment of the transaction [161] - The company may incur substantial debt to complete a business combination, which could adversely affect leverage and financial condition [144]