MercadoLibre Just Launched Its Own SPAC. Should You Invest?

If you thought the SPAC boom was over, think again. Latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) just launched its own blank check company in a $250 million IPO. In this Fool Live video clip, recorded on Sept. 30, contributor Matt Frankel, CFP, discusses the new SPAC and what MercadoLibre might do with it.  

Matt Frankel: I will go onto MercadoLibre. And because it’s 2021, we weren’t going to get through this whole show without mentioning SPACs. This is still going on. There were over 400 SPACs in the first half of the year that went public. A lot of people think that the SPAC game is dead, well, not so much. MercadoLibre just launched their own, following the footsteps of some other financial or retail giants.

Simon Property Group in the U.S. has their own SPAC that is still looking for a deal. MercadoLibre has joined the SPAC game. Their SPAC actually went public today. They partnered with, I hope I’m saying it right, Kaszek Pioneer. Its SPAC is called MELI Kaszek Pioneer Corp, ticker symbol is MEKA, co-sponsored by MercadoLibre and Kaszek. They’re raising $250 million in an IPO.

If you’re not familiar with what SPAC does, is they’re going to take that $250 million, try to use it to take a private company public, and use that $250 million as capital toward the company. I just mentioned SoFi, that’s the model they used to go public earlier this year. A lot of companies have done public by SPAC. Lucid just went public through SPAC, raised a lot of money in that process.

As you might expect, they’re keeping it vague, what they’re looking for. In the news release that the company intends to focus its search for an initial business combination on technology-enabled companies operating in Latin America across a number of verticals including, but not limited to, commerce, financial services, logistics, healthcare, education, enterprise software, and entertainment. That’s literally almost any business that is just based in Latin America. They’re not giving you too many clues there.

We don’t know what they’re going to take public yet. But one thing I will say is MercadoLibre has done a great job of allocating capital over the years. If you believe in their ability to allocate capital, which is essentially the same thesis if you buy, say, Simon Property Group’s SPAC, you’re believing in their capital allocation skills and leveraging their expertise in retail to finding good deal, then might be one you want to put on your radar. They’re getting into the SPAC game. I don’t think I’m going to buy shares yet, but it’s definitely one worth watching.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.