Latin America-Focused SPAC to Mint Billion-Dollar Software Firm Semantix

(Bloomberg) -- Semantix, a Sao Paulo-based software maker, plans on going public after merging with a blank-check company focused on Latin American tech.

The deal will give the firm an implied equity value of about $1 billion and allow it to pursue acquisitions and global expansion, according to Rafael Steinhauser, a partner at Alpha Capital, which orchestrated the transaction. Semantix, which provides data software and analytics, has clients including financial institutions, global electronics companies and automakers.

Special purpose acquisition companies -- which are known as SPACs and connect private businesses to public capital markets without having to go through a traditional initial public offering -- soared in popularity in 2020 and early 2021 but have since lost steam. The IPOX SPAC Index, which tracks the performance of a group of blank-check firms, is down more than 25% from its mid-February peak.

Alpha is betting the story will play out differently in Latin America.

“Latin America is different from the U.S., where you maybe have too many SPACs,” Alec Oxenford, the firm’s CEO and chairman, said in an interview. “You can still find companies with reasonable valuations.”

The deal would see Semantix receiving about $324 million in proceeds, according to a statement, with the money coming from Alpha Capital’s February IPO plus a $94 million private investment in public equity, or PIPE, from investors including Banco Bradesco SA, FJ Labs Inc. and Oxenford and Steinhauser themselves.

Semantix was founded in 2010 by Chief Executive Officer Leonardo Santos, who will remain at the helm after the merger. The company has more than 300 customers in 15 countries and is expected to reach $73 million in revenue next year, according to a regulatory filing. Semantix shareholders include a fund backed by Bradesco and the private-equity firm Crescera.

The firm is “growing explosively and it’s profitable,” Oxenford said, something that makes it stand out from peers in the data analytics and software sectors. The company already has offices beyond Brazil and is looking to expand further abroad.

Steinhauser, the former head of Qualcomm Inc. in Latin America, and Oxenford, who founded several second-hand sale platforms worth more than $1 billion, are already considering a possible second SPAC vehicle to look for further opportunities.

“This is the first Latam tech-focused SPAC to find a target, and this is a milestone, not just for Alpha, but for LatAm,” Steinhauser said. “Latin America has been undercovered and undervalued for a very long time. Now the world is waking up to the potential of the region.”

The banks behind the transaction were Citigroup Inc. and Bank of America Corp.

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