Red Sena shares down on first trading day

PETALING JAYA: Red Sena Bhd, the latest special purpose acquisition company (SPAC) suffered a 22%, or 11 sen drop in its share price on its maiden trading day lower in line with the overall market that dropped by 5.61 points to 1,635.75 points. 

Its warrants, however, jumped 1,600% or 8 sen to 8.5 sen. Red Sena’s warrants are issued free with the subscription of the shares, 

In other words, share holders who had invested in Red Sena at its initial public offering (IPO) price of 50 sen a share, lost 2.5 sen, if the warrants were taken into account,

With an IPO price of 50 sen a piece, Red Sena is raising some RM400mil.

The SPAC specialises in food and beverage businesses. A SPAC has no revenue-generating assets at the time of listing.

StarBiz earlier reported that Red Sena was targeting a minimum internal rate of return (IRR) of 9% for its qualifying acquisition, which it described as a reasonable level in the food and beverage industry. 

The other four SPACS are in the oil and gas (O&G) industry and offered a minimum IRR of 15%. However out of the four, only one has graduated into an O&G company while the others have yet to complete their qualifying assets.

Red Sena would need to keep some 92% of the IPO proceeds in the trust fund and the remaining 8% or RM32mil would be used to pay listing expenses and working capital. 

The proceeds cannot be used for remuneration payments to the management team.
This means that if Red Sena does not make any acquisition over the next three years, investors will get back 92% of their money including interests earned.