On Friday, April 24, Nasdaq welcomed digital sports entertainment company DraftKings (Nasdaq: DKNG) to our exchange. DraftKings completed a reverse merger with gaming technology provider SBTech and Special Purpose Acquisition Company (SPAC) Diamond Eagle Acquisition Corp., the latter of which was already listed on Nasdaq. Eklavya Saraf, Nasdaq’s global head of SPAC listings, goes behind Friday morning’s virtual Nasdaq Opening Bell, sharing his insight on how DraftKings tapped the public markets.
1. DraftKings proceeded with its SPAC initial public offering (IPO). Can you describe how the process was completed?
SPAC listings are an alternative way to go public. For background, a SPAC is a publicly-traded investment vehicle that raises funds via an IPO to take an existing private company public through an acquisition, typically within 24 months of the SPAC listing. A SPAC provides a means of faster capital raising compared to private fundraising.
DraftKings is the only vertically-integrated pure-play sports betting and online gaming company based in the United States. The Nasdaq team and I are so proud to be the listings venue of choice for this digital sports entertainment and gaming disruptor.
2. Amid the uncertainty in the markets caused by the coronavirus pandemic, how did DraftKings manage to go public?
As far as the current market volatility, the timeline was a bit different than a traditional IPO. A SPAC can offer a business a more expedited timing to go public with guidance from an experienced partner. The timeframe that allows a special purpose acquisition company to identify and complete an acquisition can help provide a more resilient foundation against the background of the current market volatility.
Generally speaking, companies of quality can get out in up and down markets, and factors like the experience of the management team and their track record come into play here. As we have seen over the years, the quality of the sponsor has become more dynamic. For example, high profile private equity and venture capital investors have been participating in SPACs in recent years. From an investment standpoint, the track record of a company supports the appeal of the deal.
3. What are the benefits of companies listing on Nasdaq via a SPAC business combination?
At Nasdaq, we strive to help companies like DraftKings throughout their growth journey. Since 2010, 81% of SPACs listed on Nasdaq, raising over $31.6 billion.* We also have an outstanding visibility platform to support brand awareness from the moment the SPAC lists with us, through to completion of the business combination and life as a public company. *As of March 2020.