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Former Barclays Chair Makram Azar on SPAC market boom amid pandemic

Makram Azar, CEO of Golden Falcon Acquisition Corp. weighs in on the SPAC market boom during the COVID-19 pandemic and the outlook for fintech companies in 2021.

Video Transcript

JULIE HYMAN: The year of the SPAC. That's how it has felt this year. And we want to talk to one of only two SPACs that is actually focused on investing in Europe. It's a company that just started trading today. It's called Golden Falcon Acquisition Corporation. Presumably it will take on the name of whatever it ends up buying. But it did have an initial public offering today. And Makram Azar, who is the CEO and a former banker at Barclays-- he was the chairman of Barclays EMEA-- is now joining us. Makram, so thank you for being here. Why do a SPAC? I mean, this phenomenon has been so fascinating to so many people I think this year. What do you think has been driving it more broadly? And what drove you to do your investing in this fashion?

MAKRAM AZAR: Good morning Julie, and thank you for having me. It's great to be here with you. Yeah, an answer to the question is I guess, first by saying that you've been observing what's happening on your side of the Atlantic. There's been a frenzy of SPAC issuance since April this year. There have been 237 I think at the last count, focusing on the US primarily. Only two were raised with the focus on Europe. And they are in sectors which are not really relevant for us. We're focusing on TMT and fintech.

And so basically while it's getting overcrowded in the US, it's really pretty much virgin territory over here in Europe. And Europe has as you already know 500 million consumers actually doing very well in lots of subsectors of TMT and fintech, for example, and digital banking and other verticals if you will, of the broader TMT, including in media. They have amazing-- what I would call European champions that would make so much sense to list on the New York Stock Exchange.

You probably have seen that historically a number of European companies have chosen to list on the New York Stock Exchange, such as Spotify or Farfetch, I'm not sure if you're familiar with them. But-- or IHS [INAUDIBLE] as well that is being bought as we speak. And they've done extremely well by being listed on the New York Stock Exchange. So the IPO market in Europe has been pretty much shot so far this year for many reasons, including the pandemic.

But there are some really gold nuggets if you will, of TMT unicorns in Europe that make a lot of sense to have to give them access to the capital markets. And the New York Stock Exchange provides obviously the best access in terms of the deepest pool of capital in terms of the most sophisticated investor base for technology stocks, broad research, analyst following, the comparable companies are based there, et cetera.

And we believe for the right European high quality company, it makes more sense because for example, if you look at the indices in Europe, they're much more skewed towards value stocks and the old economy, whether it's health care or banks or energy. But technology only accounts for 7% of the FTSE 100 for example, or even the Euro STOXX 600 while it accounts for 50% of NASDAQ and 28% of the S&P. And that translates into an underperformance because all the European indices are still in negative territory. The FTSE is down 14% yesterday while the NASDAQ is up 42%.

So if you are a TMT entrepreneur, a successful unicorn founder who created a lot of value within your company and you want access to the capital markets, you probably would choose the market, which obviously would give you a better reception and a better valuation than here in Europe. And as you probably know, the venture capital pool in Europe is much smaller than in the US. It's a fraction of the size of the US. So as European companies, particularly the unicorns become more valuable, it's more difficult for them to stay in the private hands, in the private domain. So they need access to the capital markets. The IPO market has been not there.

And we basically constructed Golden Falcon, my partner and I, Scott Freidheim, to really address that compelling opportunity and offer those highly qualified European companies to gain access to the capital markets in the US, not just being listed, but also basically we can help them with the deep banks that we build penetrate the US market more fully in terms of their business and their operations. So we've constructed a team of strategic advisors to complement the management and the board, basically to add value to those companies who want to grow further in the US, who have an ambition to grow further into the US, both organically and through M&A.

BRIAN SOZZI: Makram, we have about 20 seconds left. Are there any-- is there one TMT unicorn you're particularly really excited about and may work with?

MAKRAM AZAR: There are many. There are 60 in Europe, TMT unicorns. There are 20 the UK, over 20. There are 20 between Germany and France. We can't give you names for legal reasons as you probably know. But we have a number on our radar screen and on our target list, which we will engage with as soon as our IPOs close, which means on Tuesday when the settlement happens. Until then, we can't give any names, but we have a pretty good target list. We know what we like.

JULIE HYMAN: Makram, please come back and see us when you do figure that out. When you guys have a deal to announce, we would love to touch base once again. Makram Azar is CEO of the Golden Falcon SPAC. Again, congratulations on going public and we look forward to the next step. I appreciate it.

MAKRAM AZAR: Thank you so much. Thank you both, and see you again soon for sure. All the best, thank you for having me.