Apex Clearing to go public via SPAC in $4.7 billion deal

Digital custodian Apex Clearing is going public through a merger with Northern Star Investment Corp. II, a publicly traded special purpose acquisition company, in a deal that puts the combined company’s value at $4.7 billion. 

Apex is expected to become a publicly listed company on the New York Stock Exchange under the ticker symbol APX, according to the announcement Monday. The Northern Star Board of Directors and Apex's Board of Managers have unanimously approved the proposed merger, which is expected to be completed in the second quarter. 

Special purpose acquisition companies, known as blank-check companies, like Northern Star raise money through an initial public offering to acquire a private company, which then becomes public as a result of the merger. 

Apex Clearing launched in 2012 as an API-driven alternative to traditional custodians and previously served as the custodian for firms like Wealthfront and Robinhood, two of the most successful fintech startups. Both companies have since left Apex to build their own custody platforms. 

Apex has approximately $100 billion under custody currently, according to the announcement. Year-to-date, Apex Clearing has provided custody for $14 billion in new assets and serves more than 200 clients representing more than 13 million customer accounts, 3.2 million of which have been opened in 2021 alone, and more than 1 million new crypto accounts.

Following the closing of the transaction, Apex CEO William Capuzzi and the company's president, Tricia Rothschild, will continue to serve in their current roles at the combined company.

Northern Star Chairwoman and CEO Joanna Coles, former chief content officer for Hearst Magazines and former editor-in-chief of Cosmopolitan Magazine and Marie Claire, will join the combined company’s board of directors.

“Bill Capuzzi and his team at Apex have helped accelerate the growth of a business that now spans delivery channels (B2C and hybrid), asset classes and levels of investor affluence” William Trout, Javelin Strategy's head of wealth management, wrote in an email. “Remember when digital advice was dismissed as a tool for millennials?”

Apex is just the latest wealthtech company to leverage a SPAC deal to go public. Digital investing and banking platform MoneyLion announced Feb. 12 that it is going public through a merger with SPAC firm Fusion Acquisition Corp. in a deal that puts the combined company’s value at $2.9 billion. 

And in January, Social Finance Inc. agreed to be taken public by a blank-check firm backed by venture capital investor and Social Capital CEO Chamath Palihapitiya in a deal that values the upstart at around $8.7 billion.

 “We are at an inflection point in the wealth management industry, with demand for a one-stop-shop approach to banking and investments driving investor interest in firms like SoFi and MoneyLion, as well as in infrastructure providers like Apex Clearing that undergird the digital experience,” Trout said.

SPACs are appealing for companies because they offer a vehicle for tapping into investor interest while supporting the broader industry trend toward democratization, he added. "They present an alternative to the heavily regulated IPO model, in which institutions and the very wealthy have first crack at the deals."

One potential problem is that they may funnel capital into businesses that couldn't withstand serious investor scrutiny, Trout said. 

“The SEC and other regulators may want to take a look at the extent to which the 'SPACtacular' growth of these vehicles could signal a decoupling from economic fundamentals as well as the role of social media in amplifying investor enthusiasm,” he said.