Forbes SPAC: Everything you need to know about Forbes

Forbes is an American magazine and digital publishing brand focused on business. It targets luxury brands for advertising and a readership featuring high net worth clients. Its next stage is to go public. Read on to discover why and how it is making this move.

Charts (3)

When will Forbes go public?

Global media company Forbes, whose popular magazine pioneered the curation of “thought leadership” editorial, intends to go public either in late 2021 or in the first quarter of 2022. It will do so via a merger with a blank-check firm.

The proposal is one of a number of examples of media companies cottoning onto the attractions of special purpose acquisition companies (SPACs) while continuing to adapt to a fluid and rapid digitalisation of the media space.

Among other media companies also looking to go public, Buzzfeed is thought to have first mover advantage, with Vice, Vox and Bustle closely watching the lie of the land.

Forbes, one of the oldest media outlets in the United States, plans to merge with Hong Kong-based Magnum Opus Acquisition Ltd. This is a SPAC led by Jonathan Lin, a former executive at billionaire Steven Cohen's Point72.

The deal will allow Forbes to deepen its investments in building consumer-focused products as the company reduces reliance on media revenue. In an announcement, it said it planned to use “technology and data-driven insights to create more deeply engaged audiences and associated high-quality, recurring revenue streams.”

How much is Forbes worth?

Forbes is very good at telling people how much other people are worth – its global rich list of billionaires is now updated in real time and is a valuable resource for people interested in such things.

But Forbes itself will not achieve a billion-dollar valuation even if the SPAC proceeds smoothly. After the SPAC completes, the deal is expected to bring in $600 million, two-thirds of that coming from a private investment in public equity (PIPE).

The combined entity is expected to be worth $630 million. Previously, Forbes was valued at $475 million when Hong Kong-based investor group Integrated Whale Media Investments bought a majority stake in 2014.

It reported $163 million in revenue in 2020 and hopes to grow that to around $190 million in 2021.

Why is the PIPE element so significant?

The unusually large PIPE element can be set against the following backdrop: the broader SPAC market has been weighed down by increased regulation and saturated demand, and many companies are struggling to attract the interest of leading Wall Street institutional investors.

Forbes shareholders will own nearly 22% of the combined company, assuming no redemptions by Magnum's investors, and the company will be left with $145 million in cash. Magnum itself raised $200 million in a March IPO.

What does Forbes do?

Forbes has a printed magazine published eight times a year. Its editions feature commissioned articles on finance, industry, investments, and marketing. It also reports on related subjects such as technology, communications, science, politics, and law.

It is well known for keeping a range of lists and rankings – usually rating entities or individuals based on their net worth.

Forbes offers 27 local language editions, a digital division (Forbes.com) and a live streaming platform (Forbes8).

How does Forbes make money?

Traditionally, Forbes would make its money through subscriptions, single purchases and advertising revenue.

But this model is becoming an increasingly difficult one to mine for profits - and the whole media industry is affected.

Forbes’ revenue plan now involves stepping up live events and leveraging its brand and reader base to build scalable products. Areas such as education and e-commerce are being targeted for revenue potential.

What is Forbes’ business strategy?

Forbes’ new business strategy has been outlined by CEO Mike Federle. He says: "We've created this audience and business scale with 150 million people. This funding [the SPAC] will allow us to create bespoke products that address these different industry cohorts as we focus on direct-to-consumer conversion.”

In other words, he is hoping that regular subscribers are so wedded to the Forbes brand that they will buy additional material, including educational products, offered by the company.

One can imagine a significant spend on marketing initiatives to cross-promote a range of digital and other products to existing customers.

Forbes has been a little thin on detail. In its prospectus, it states it has “played an important role in connecting people with trusted information and insight amidst a rapidly evolving market.”

It now wants to “maximize its brand and enterprise values and use its proprietary technology stack and analytics to convert readers into long-term, engaged users of the platform, including through memberships and recurring subscriptions to premium content and highly targeted product offerings.”

Is Forbes profitable?

As a private company, Forbes does not have a duty to disclose profits. But in December 2018, in an interview with Digiday, Federle claimed it had enjoyed its most profitable year since its creation.

He declined to name a specific revenue figure but said overall revenues were up by more than 18% with profits up by 42%, year on year.

In 2017 Forbes acquired The Memo, a London-based business magazine, and made two investments in other companies. At the time of the interview Federle was looking to make “one or two early-round investments or acquisitions per year.”

Who is on the Forbes Board of Directors?

The following individuals comprise the Forbes Executive Leadership Team:
  • Mike Federle - CEO
  • William Adamopoulos - CEO (Asia)
  • Taha Ahmed - VP (Corporate Development & Strategy)
  • Maria Rosa Cartolano - General Counsel
  • Moira Forbes - Executive VP, Forbes Media
  • Nina Gould - Chief Product Officer
  • Bill Hankes - Chief Communications Officer
  • Peter Hung - President, Licensing & Branded Ventures
  • Ali Intres - Senior VP, Human Resources & Talent Management
  • Randall Lane - Chief Content Officer
  • Sherry Phillips - Chief Marketing Officer
  • Lynn Schlesinger - Chief Customer Experience Officer
  • Jessica Sibley - Chief Revenue Officer
  • Vadim Supitskiy - Chief Technology Officer
  • Michael York - Chief Financial Officer

More from IPO

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.