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United States securities and exchange commission logo
December 22, 2021
Gal Krubiner
Chief Executive Officer
Pagaya Technologies Ltd.
Azrieli Sarona Bldg, 54th Floor
121 Derech Menachem Begin
Tel-Aviv 6701203, Israel
Re: Pagaya Technologies
Ltd.
Draft Registration
Statement on Form F-4
Submitted November
24, 2021
CIK No. 0001883085
Dear Mr. Krubiner:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-4
Questions and Answers About the Transactions and the Special Meeting
What interests do the Sponsor and the current officers and directors of
EJFA have in the
Merger?, page xx
1. We note EJFA's charter
waived the corporate opportunities doctrine. Please address this
potential conflict of
interest and whether it impacted EJFA's search for an acquisition
target.
Gal Krubiner
FirstName LastNameGal
Pagaya Technologies Ltd.Krubiner
Comapany22,
December NamePagaya
2021 Technologies Ltd.
December
Page 2 22, 2021 Page 2
FirstName LastName
Risk Factors
We are heavily dependent on our AI technology. If we are unable to continue to
improve our AI
technology..., page 29
2. Please revise to clarify the liability that you assume, if any, if
your AI technology
incorrectly evaluates the creditworthiness, likelihood of default or
credit asset pricing for
your Partners customers. If applicable and to the extent material,
please revise to discuss
any liabilities that you have incurred in the past as a result of
incorrect approvals or
denials of transactions by your AI technology.
If we are unable to develop and maintain a diverse and robust funding component
of our
network..., page 32
3. You disclose that four of the largest Asset Investors together
contributed approximately
49% of Network Capital during the six months ended June 30, 2021,
compared to
approximately 81% during the 12 months ended December 31, 2020. Please
revise
elsewhere in the prospectus, such as the "Pagaya s Business"
section, to describe in
greater detail the material terms and conditions of any related
agreements. Also please tell
us how you considered filing the same as exhibits to the registration
statement. See Item
601(b)(10) of Regulation S-K.
If we are unable to manage the risks associated with fraudulent activity, our
brand and
reputation, business, financial condition..., page 37
4. Please revise to clarify whether you have experienced any material
business or
reputational harm as a result of fraudulent activities in the past. If
so, and if material,
please also quantify the amount by which such past fraudulent
activities have increased
your costs and expenses.
If we are deemed to be an investment company under the Investment Company
Act..., page 55
5. We note that you intend to operate your business in a manner that will
permit you to
maintain an exemption from registration under the Investment Company
Act of 1940.
Please provide us with a detailed analysis of the specific exemptions
that you intend to
rely on and how your business model supports such exemptions.
The Pagaya A&R Articles contain a forum selection clause for substantially all
disputes between
us and our shareholders..., page 65
6. We note your disclosure that the forum selection clause contained in
the Pagaya A&R
Articles would not apply to claims brought pursuant to the Exchange
Act, among
others. Please revise the related disclosure on page 268 and the
relevant provision for
consistency or advise.
Gal Krubiner
FirstName LastNameGal
Pagaya Technologies Ltd.Krubiner
Comapany22,
December NamePagaya
2021 Technologies Ltd.
December
Page 3 22, 2021 Page 3
FirstName LastName
The EJFA Warrants may have an adverse effect on the market price of the EJFA
Class A
Ordinary Shares..., page 75
7. Please quantify the value of warrants, based on recent trading prices,
that may be retained
by redeeming stockholders assuming maximum redemptions and identify
any material
resulting risks. Also, revise your disclosure to show the potential
impact of redemptions
on the per share value of the shares owned by non-redeeming
shareholders by including a
sensitivity analysis showing a range of redemption scenarios,
including minimum,
maximum and interim redemption levels.
EJFA Public Shareholders will experience immediate dilution..., page 84
8. Here or in another appropriate place in the prospectus, please revise
to disclose all
possible sources and extent of dilution that shareholders who elect
not to redeem their
shares may experience in connection with the business combination.
Please provide
disclosure of the impact of each significant source of dilution,
including the amount of
equity held by founders, convertible securities, including warrants
retained by redeeming
shareholders, at each of the redemption levels detailed in your
sensitivity analysis,
including any needed assumptions.
Fairness Opinion of Duff & Phelps
Fees and Expenses, page 114
9. Please quantify the respective portions of the $800,000 fee payable to
Duff & Phelps upon
delivery of the Opinion and upon consummation of the Merger.
U.S. Federal Income Tax Considerations, page 167
10. The preamble to your Agreement and Plan of Merger (page A-1) states
that the parties
intend that for U.S. federal income tax purposes, the Merger will
qualify as a
reorganization within the meaning of Section 368(a) of the Code.
However, the tax
disclosure does not indicate whether the parties expect the business
combination to be tax-
free to U.S. holders. Please revise to make clear whether the parties
expect the business
combination to be tax-free to U.S. holders. If you are able to
conclude that the business
combination is likely to be tax-free to U.S. holders, include a tax
opinion supporting such
a conclusion. For further guidance see Staff Legal Bulletin No. 19
(October 14, 2011) and
Item 601(b)(8) of Regulation S-K. If there is uncertainty regarding
the tax treatment of the
business combination, counsel s opinion should discuss the degree of
uncertainty.
Pagaya's Management Discussion and Analysis of Financial Condition and Results
of Operation,
page 207
11. In your Results of Operations section for both your full year and
interim periods please
revise your disclosure to clearly state what portion of your increased
revenue was due to
increased AI network volume vs. higher quality assets generated by
your
Gal Krubiner
FirstName LastNameGal
Pagaya Technologies Ltd.Krubiner
Comapany22,
December NamePagaya
2021 Technologies Ltd.
December
Page 4 22, 2021 Page 4
FirstName LastName
network. Further, clarify how higher quality assets contribute to an
increase in revenue
from your financing vehicles.
Unaudited Prospective Financial Information of Pagaya, page 220
12. We note the statement on page 221 that the "summary of the Financial
Projections is not
being included in this proxy statement/prospectus to influence your
decision whether to
vote in favor of any Proposal." Please remove or revise this
disclaimer so it does not
constitute an undue limitation on reliance of information provided in
the proxy
statement/prospectus.
Description of Pagaya Warrants, page 278
13. Please clarify whether recent common stock trading prices exceed the
threshold that
would allow you to redeem public warrants. Additionally, please
clearly explain the steps,
if any, you will take to notify all shareholders, including beneficial
owners, regarding
when the warrants become eligible for redemption.
Security Ownership of Certain Beneficial Owners and Management of Pagaya, page
283
14. Please also disclose the Sponsor's and its affiliates' total potential
ownership interest in the
combined company, assuming exercise and conversion of all securities
they own,
including equity securities that the Sponsor has the right to acquire
beyond 60 days.
Audited Financial Statements of Pagaya Technologies Ltd.
Notes to Financial Statements
2. Summary of Significant Accounting Policies-Revenue Recognition, page F-36
15. Please revise your disclosure included in both your audited and
interim financial
statements to include the information regarding contract balances
required by ASC 606-
10-50-8 and the information regarding performance obligations required
by ASC 606-10-
50-12 through 50-21.
16. You state the Company earns fees when Network Volume is acquired by
investment
vehicles and these fees are the result of agreements with customers
(your Partners). Please
tell us, citing the agreements and applicable literature in ASC 606,
how you determined
your Partners, and not the investment vehicles, are your customers.
Describe the specific
service(s) promised to your customers and how you are paid for those
services per the
agreements.
5. Consolidated and Variable Interest Entities, page F-42
17. Please revise to describe in more detail how you determine whether to
consolidate related
party securitization vehicles that you sponsor. Specifically, describe
what you consider
when evaluating the power and economics criteria in ASC 810 in
determining whether
you are the primary beneficiary of the VIE. Further, as it relates to
your interim financial
Gal Krubiner
Pagaya Technologies Ltd.
December 22, 2021
Page 5
statements provided for the period ended June 30, 2021, clarify why
the sum of your
"investments in loans and securities" (as disclosed in the footnote)
does not agree to the
amount presented on the face of your balance sheet.
18. Please explain why there are no liabilities associated with the
Company's involvement in
consolidated VIEs.
7. Transactions with Related Parties, page F-44
19. Please provide an explanation as to why related party transaction
amounts in both your
audited and interim period financial statements, including related
party receivable, are not
appropriately labeled as such on the face of your balance sheet,
income statement and cash
flow statement in accordance with Rule 4-08(k) of Regulation S-X.
Further, as it pertains
to the $24.7 million related party receivables balance as of June 30,
2021, provide the
information required by ASC 850-10-50-1.
General
20. Please move the Letter from the Founders from the forepart of your
prospectus to
somewhere in the prospectus after the risk factor section.
21. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
You may contact Jacob Luxenburg, Staff Accountant, at (202) 551-2339 or
Sharon
Blume, Accounting Branch Chief, at (202) 551-3474 if you have questions
regarding comments
on the financial statements and related matters. Please contact David Lin,
Staff Attorney, at
(202) 551-3552 or Sandra Hunter Berkheimer, Legal Branch Chief, at (202)
551-3758 with any
other questions.
FirstName LastNameGal Krubiner Sincerely,
Comapany NamePagaya Technologies Ltd.
Division of
Corporation Finance
December 22, 2021 Page 5 Office of
Finance
FirstName LastName