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Laxman Pai, Opalesque Asia: The special purpose acquisition company (SPAC) boom is sputtering, but market dynamics point to recovery and increased transactions between SPACs and private equity & venture capital (PE/VC), says a report.
According to Preqin, 2020 was the year of SPAC, but there are no superlatives to describe the first quarter of 2021.
The Q1 total of $88bn raised by 320 blank-check companies eclipsed the $76bn raised in the whole of 2020, according to Standard & Poors. The brakes were slammed in April, with just 10 IPOs raising gross proceeds of $17bn in April and May, according to calculations based on SPACinsider data.
Grant Murgatroyd, Senior Writer, at Preqin said: "The trigger was an SEC statement on reporting and accounting for SPAC warrants on 12 April. Legal and financial advisory firm Appleby Global Services said the SEC's suggestions were, broadly speaking, procedural and would be easy to implement, but it was enough to spook investors."
The report, quoting Bloomberg said that an additional brake came from the disintegration of hedge fund Archegos, which caused multibillion losses at banks and has led to reduced lending to hedge funds.
Hedge funds had been big investors in SPACs but were reliant on leverage to juice the returns, it said.
So, has the SPAC party come to an end? S&P titled its latest SPAC commentary "RIP SPACs," though it did concede the title was "a bit facetious." As Preqin reported in early April...................... To view our full article Click here
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