When reading this FT article after its IPO, the business model of Blending Spoons (Ticker: BSP) interests me. Simply put, it is a listed, open-end PE firm. While this claim that they will not liquidate their “subsidiaries”, this is far from a convincing promise to keep.
The article states that the lack of disclosure significantly constrains BSP’s debt refinancing ability and is a key driver of its IPO decision. While sounds reasonable, it does not make logical sense. IPO disclosure should be much broader than what is required by the creditors, especially if you are seeking funds from private credits. Given this, this worry shouldn’t be the main reason. The more likely story, from my perspective, is that the previous private credit incidents, e.g., Blue Owl Capital, significantly reduce the credit supply to these startups. To meet its own financing needs, BSP has to go IPO. Now as it goes into public, the SEC reporting requirements will reveal the performance of its underlying assets to the public. We shall wait and see!
While the business model sounds risky, this is actually a very extreme version of innovation outsourcing that I have been advocating. When you have the funds and limited inside investment or innovation opportunities, the best way is to invest in other external firms with such abilities and potential through an equity stake in those firms. CVC can be one of this example and what Blending Spoons is doing is similar to M&A or SPAC, given “More than three quarters of its deals have also been struck in the past three years…”.