Much of the mystery surrounding shell company Foley Trasimene Acquisition II (NYSE:BFT) was dispelled when it announced that it’s planning a special purpose acquisition company (SPAC) merger with integrated payments platform Paysafe. So now, if you hold onto BFT stock then you’re effectively choosing to invest in Paysafe.
Is that a good or a bad thing? It depends on whether you approve of Paysafe’s business model and revenue-generating potential.
Moreover, your stance on BFT stock should depend on whether you trust the judgment of financial services veteran Bill Foley. After all, the shell company is named after him (and you might have noticed that Foley’s initials, BF, are contained in the stock ticker symbol).
Together, we’ll explore Paysafe’s value proposition and perhaps learn a little bit about Foley’s history with SPAC’s. But first, let’s break down the fast-moving price action of BFT stock.
A Closer Look at BFT Stock
Oftentimes, you’ll see pre-deal SPAC stocks clinging to the $10 area for a while. That occurs because investors are waiting for the SPAC to reveal which company they plan to reverse-merge with.
You might even see these types of stocks cling to $10 for many months. As the U.S. Securities and Exchange Commission explains, “A SPAC will typically provide for a two-year period to identify and complete an initial business combination transaction. However, some SPACs have opted for shorter periods, such as 18 months.”
What’s interesting about BFT stock is that the timeline to post-deal liftoff didn’t take anywhere near two years. Indeed, its initial public offering date was Aug. 19, and the merger announcement took place on Dec. 7.
The BFT stock bulls promptly pushed the share price up to $17 on Dec. 28. However, a bit of profit-taking followed. At the close of the market session on Jan. 19, BFT settled at $16.55. So overall, the price trend is still to the upside.
Getting to Know Foley
If you’d like to get the full scoop on Foley’s fascinating backstory, please feel free to check out InvestorPlace contributor Will Ashworth’s excellent article on that topic.
For the time being, I’ll just give you the highlights:
- Foley has led four SPAC’s.
- Despite the “II” at the end of the name, Foley Trasimene Acquisition II is Foley’s fourth SPAC.
- Foley’s first SPAC was CF Corp. That company’s merger with Fidelity & Guaranty Life was valued at $2.24 billion.
- Fidelity National Financial (NYSE:FNF) ended up buying out Fidelity & Guaranty Life for a whopping $3.25 billion. Foley, meanwhile, is said to have earned an approximate $138 million return, or 515%, on his investment in CF Corp.
- Foley raised $900 million for the first iteration of Foley Trasimene Acquisition (NYSE:WPF) in May of 2020. The market is still waiting to find out which company will be the merger target of that one.
- Fun fact: Foley owns the Las Vegas Knights NHL team.
A Safe Bet on Fintech
So now, you know a little bit more about the fabulously wealthy initiator of the SPAC deal with Paysafe. Yet, this leads us to an important question: is Paysafe a worthy merger target?
There’s an old saying: go big or go home. Suffice it to say that Foley went big with his fourth SPAC deal as the Paysafe merger was assigned a pro-forma enterprise value of around $9 billion.
If there’s safety in big numbers, then Paysafe ought to inspire confidence even among investors who might be unfamiliar with the world of fintech and payment processing.
Billed as the leading integrated payments platform, Paysafe has processed nearly $100 billion of payment volume. In case that number wasn’t big enough for you, here are a few more from the SPAC’s press release:
“With over 20 years of online payment experience, an annualized transactional volume of over US $98 billion in 2019, and approximately 3,000 employees located in 12+ global locations, Paysafe connects businesses and consumers across 70 payment types in over 40 currencies around the world.”
Get the picture? As the data clearly indicates, Paysafe is as fiscally solid a SPAC acquisition target as any investor could reasonably expect.
The Bottom Line
You might like or dislike Foley, but there’s no denying his interesting backstory and track record.
If you appreciate Foley’s financial finesse – or at the very least, acknowledge Paysafe’s powerful position in the fintech space – then BFT stock deserves a place in your portfolio.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.